iStock.com/Peshkova IMMR Stock: Large Patterns Produce Larger Reactions
The month of May has come and gone. I have not sold and I have not gone away. Instead, I am still here and I feel great going into the latter half of 2018.
The reason why is that the elevated levels of volatility that were responsible for the tenuous markets in the first quarter have subsided and cooler heads are once again prevailing. Both the Russell 2000 small-cap index and the Nasdaq Composite have gone on to make new highs, suggesting that the weakness the markets experienced earlier this year was just a much-needed correction within a predominantly bullish trend.
As I mentioned, small-cap stocks and technology stocks are currently the sectors leading the market indices higher. In light of these events, I decided to focus on Immersion Corporation (NASDAQ:IMMR) stock because Immersion stock is both a technology stock and a small-cap stock. If these sectors are going to continue to outperform, then odds suggest that IMMR stock will too.
In all honesty, being in the correct sector will help fuel a move if one is going to occur, but it is not the main reason why I have chosen Immersion stock.
The main reason is technical in nature. IMMR stock has recently completed an extremely large technical price pattern, and its completion implies that an equally large move is now expected to follow.
This technical price pattern is highlighted on the following Immersion stock chart.
Chart courtesy of StockCharts.com
The technical price pattern highlighted on the IMMR stock chart is a cup-and-handle price pattern.
Cup-and-handle price patterns are created when a significant level of price resistance prevents the stock price from advancing beyond it. The significant level of price resistance on the Immersion stock chart was established in July 2007.