Comerica Inc: Navigating the weekly breakout

Comerica Incorporated (CMA) is a major financial services company headquartered in Dallas, Texas. CMA provides a wide array of products including commercial banking, wealth management, and retail services, making it a key barometer for the health of the middle-market business sector.

The long-term vision: Inverse head and shoulders

The primary story on the weekly chart is the completion of a massive Inverse Head and Shoulders (IH&S) pattern. This classic bottoming formation suggests that the multi-year downtrend has officially reversed.

By calculating the distance from the head to the neckline and projecting it upward from the breakout point, we arrive at a targeted measured move of $119.78. This target represents significant upside from current levels, provided the structural integrity of the chart remains intact.

Near-term caution: Overbought conditions

While the long-term target is compelling, the stock is currently overbought in the near-term. Following the recent vertical move, technical indicators suggest the price has extended too far, too fast. Chasing the breakout at these levels carries higher risk, as a period of consolidation or a “mean reversion” pull-back is likely needed to digest these gains.

Strategic buy levels

For investors looking to build or add to a position, the chart identifies three distinct entry zones based on risk tolerance:

• Aggressive Buy $83.55: This level is for those who believe the momentum is strong enough to bypass a deep correction.
• Moderate Buy $76.75: Situated slightly lower, providing a better risk-reward ratio by waiting for a partial retracement of the recent surge.
• Conservative Buy $70.40: This level aligns with the major support of the IH&S neckline. Waiting for this entry offers the highest margin of safety, as it tests the “polarity” of the previous resistance turning into support.