Amazon’s Chart Just Flashed a Pennant Pattern—Here’s What to Do

Written by Sam QuirkeTech titan Amazon.com Inc (NASDAQ: AMZN) closed just under $230 on Tuesday evening, extending an 8% gain since the first week of August. The broader uptrend since April remains firmly intact, with shares up more than 40% in that stretch.

Yet what has caught chart-watchers’ attention this week is a technical pattern that should be on every Amazon investor’s radar—the pennant.

Let’s jump in and see why these can be so important, and highlight some ways investors can think about playing it with Amazon.

A Technical Setup Worth Watching

A pennant forms when a stock consolidates in a narrowing range following a sharp move, with lower highs and higher lows gradually converging into the corner of a triangle. It suggests a temporary lack of outright control between buyers and sellers, with each side playing it safe until there’s a clear move in one direction.

For those of us on the sidelines, it’s worth noting that professional traders pay close attention to pennants because they often precede powerful breakouts. Tesla Inc.’s (NASDAQ: TSLA) chart provided a recent example, breaking out of a similar setup two weeks ago and rallying on from there.

Amazon has been logging lower highs since the end of July and higher lows since the start of August. This tug-of-war has produced a clean pennant pattern on the chart, with shares currently testing the upper band.

A breakout could come at any time, though it wouldn’t be surprising if the stock bounces around within the tightening range for a couple more sessions until the pressure becomes unsustainable.

Strong Fundamentals Support a Rally

The key question is whether the breakout, when it comes, will be to the upside or downside.

All things considered, the odds favor the former. Amazon’s fundamentals remain strong, and its earnings reports have consistently topped expectations this year.

The company has delivered across cloud, retail, and advertising, giving investors multiple growth engines to lean on.

Wall Street is equally supportive. Analysts have consistently rated it a Buy all year, with some of the more recently refreshed price targets from earlier this month ranging up to $300.

Tuesday’s close near $230 implies a solid targeted upside of around 30%, bolstering the argument that any breakout from this pennant should be to the upside.

Positioning for the Next Leg Higher

The strategy is straightforward for investors with a long-term bullish view of Amazon. Building an initial position now, while the stock consolidates ahead of a clear move, makes sense—especially given the broader uptrend and supportive macro environment.

Adding to that position once the breakout occurs allows you to take on additional exposure more confidently.

For those who prefer to wait, the signal to watch for is a decisive green candle breaking through the descending upper line of the pennant on strong volume, followed by the stock holding those gains into the close. That combination would confirm that the consolidation phase is over and the next leg higher is underway.

Support, Resistance, and Breakout Potential

Conversely, a plunge through the rising lower line of the pennant would be a red flag. It would suggest that sellers have taken back control, raising the risk of a deeper pullback.

Current support sits around $220, and a sustained break below that would force investors to reassess.

With equities broadly in rally mode and risk-on sentiment dominating, a downside break looks less likely.

The initial upside target on a breakout would be $235, where shares topped out in late July. Beyond that, February’s high of around $240 comes into play.

If those levels are cleared, momentum should carry the stock into blue sky territory, especially with analysts already pointing to $300 as a medium-term destination.

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3 Undervalued Stocks Analysts Are Loving Right Now—Should You?

Written by Gabriel Osorio-MazilliEvery market cycle eventually hits a point where conventional thinking begins to lag behind reality. Today, several stocks are priced below their true potential, signaling a rare opportunity. Legacy views become outdated, and prices no longer reflect the true potential of certain companies.

Right now, there are several stocks showing a clear disconnect between current market valuations and their underlying fundamentals. As analysts begin to adjust their models, investors have a rare opportunity to get in ahead of the curve.

Three such companies receiving fresh attention from Wall Street analysts due to updated growth trajectories and analyst upgrades are Reddit Inc. (NYSE: RDDT), Caterpillar Inc. (NYSE: CAT), and Nu Holdings Ltd. (NYSE: NU). When prices diverge from fundamentals, smart investors pay attention. Now is one of those times.

Reddit: AI’s Most Valuable Human Dataset

Reddit offers something most AI platforms can’t replicate: natural, human conversation.

As more and more users have AI draft their posts, many text-based social media sites have started to feel a bit “botty.”  But unlike typical social media, Reddit discourages promotional content, keeping language more natural. This is truly what’s of value for these large language models (LLMs) as they strive to learn how humans truly communicate—and what makes Reddit’s data a powerful, monetizable asset.

And Wall Street has noticed, with analysts giving Reddit stock a consensus Moderate Buy rating. In fact, Argus recently set a $250 price target, a possible 14% upside from current levels, citing Reddit’s strategic advantage in AI training data and its compelling growth outlook.

However, with a projected 19% downside, the broader analyst consensus tells a more complex story. That apparent contradiction can be confusing, but it reflects how analyst sentiment works: commentary, upgrades, and ratings often shift before the math catches up. Even if the consensus target suggests a near-term pullback, increasing analyst conviction, positive outlooks, and early upgrades like Argus’s may indicate longer-term bullish momentum that hasn’t yet been fully priced in.

In addition, short sellers have started to step away from their positions, as evidenced by a 7.2% decline in short interest for RDDT over the past month alone, an initial signal of bearish capitulation.

Caterpillar: Positioned for Infrastructure and Energy Demand

Caterpillar has long been synonymous with construction, but its future lies in the energy and tech infrastructure boom. As demand surges for data centers and the energy grids to support them, Caterpillar is emerging as a critical enabler.

In Q2, Caterpillar’s Energy & Transportation segment posted a 7% year-over-year revenue increase to $7.8 billion, driven by rising demand for data center electrification and hydrogen-ready turbines. At its Lafayette, Indiana facility, the company is producing 1,000 to 6,000 horsepower generators, essential infrastructure for AI-powered data centers.

Given this momentum, analysts now rate the stock a Moderate Buy with a price target of $450, reflecting a mere 4% upside potential. However, J.P. Morgan’s Tami Zakaria thinks there’s more potential, assigning Caterpillar an Overweight rating with a $520 price target, implying a much more attractive 20% upside instead.

Investors should also note that Caterpillar saw $7.7 billion in institutional inflows last quarter, confirming the company’s higher implied ceiling amid the current surge in new commercial construction activity.

Nu Holdings: Dominating Latin America’s Digital Finance

Nu Holdings is reshaping the Brazil’s financial landscape with its digital-first approach. As one of Latin America’s largest and fastest-growing economies, Brazil is home to a rising middle class demanding more accessible, efficient banking options—needs that traditional banks have struggled to meet.

Nu’s streamlined, tech-driven approach is filling that gap, driving explosive adoption and laying the groundwork for broader expansion throughout Latin America. And it would seem that the company’s current valuation doesn’t fully reflect that brighter future…yet.

With a Moderate Buy rating and a $16.60 consensus price target, NU is beginning to attract more bullish sentiment. For example, Citigroup’s Gustavo Schroden recently upgraded the stock to a Buy with a $18 price target, indicating a potential 30% upside, after the company reported an earnings per share (EPS) of 14 cents, beating expectations of 12 cents.

One of the benefits investors can gain from a company like Nu Holdings is that it still flies under the radar for many U.S. institutional investors given that it is based in Brazil. But that might not last long if it continues to provide consistent earnings growth and build its regional momentum.

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Williams-Sonoma Q2 Results Prove Its Buy-and-Hold Quality

Written by Thomas HughesWilliams-Sonoma’s (NYSE: WSM) stock price action and results history do not precisely match up; investors should focus on the results history. It includes persistent outperformance in the face of consumer headwinds, brand resilience, pricing power, margin strength, robust cash flow, and capital returns. While the growth outlook is critical to the stock price outlook, it underpins the capital return, the driving force for this market.

Williams-Sonoma is an aggressive capital return machine. It pays a dividend, grows its distribution at a double-digit CAGR, and buys back shares.

The buybacks are among the most aggressive on Wall Street, reducing the count by an average of 4.7% for the quarter. The pace is likely to be kept up due to the health of the balance sheet, cash flow, and authorization amount.

The authorization is sufficient to sustain the Q2 pace for the next three quarters and will likely be increased due to the business outlook. The dividend distribution, which yields about 1.3% in late August, is likewise expected to be increased. It accounts for less than 30% of the earnings outlook and has a nearly 20-year history of prior annual increases.

Williams-Sonoma is in a fortress-like condition; there are no red flags for income investors. Its cash and inventory are up; inventory increased to front-run tariffs, which is a positive development. Equity is steady despite the aggressive buyback, and leverage remains persistently low.

The company carries minimal debt, primarily in the form of lease obligations, and its total liabilities are approximately 1.5x its equity, leaving it in a healthy and flexible financial condition.

Williams-Sonoma Wows Market With Beat-and-Raise Quarter

Williams-Sonoma had a good quarter with results driven by strength in all reporting metrics. The $1.84 billion in net revenue represents a 2.8% increase compared to last year, outpacing the consensus by a slim margin, driven by growth across all brands. Comps were up 3.7% across the network, led by 5% gains in Williams-Sonoma and Pottery Barn Kids, offset by slower performance at Pottery Barn and West Elm.

The company noted strengths in furniture and non-furniture categories and the positive impact of selling at full price. Among its strengths are premium quality, branding, and targeted markets, which enable full-priced selling and product exclusivity despite the challenges of consumer headwinds.

The net result is a wider gross margin and declining SG&A expense, resulting in an operating margin increase of 220 basis points compared to last year and an operating margin at the high end of the long-term target range. Margin is expected to remain strong through the year’s end.

The guidance is good and aligns with the outlook for higher share prices. The company raised its revenue outlook while affirming its margin outlook, forecasting 0.5% to 3.5% top-line growth and no additional impact from tariffs.

The critical takeaway is that tariffs have been priced into the outlook for this retail stock, which includes earnings growth and sufficient cash flow to sustain the capital return.

Sell-Side Support Is Strong: WSM Stock Forecasted to Hit Record Highs

The analysts and institutional trends indicate robust support for this stock. The institutional group, including large shareholders, owns approximately 99% of the shares and has been actively buying.

The group sold in Q1 but reverted to buying in Q2, and the Q3 activity is robust, providing a strong tailwind for price action. Institutional selling virtually dried up in the first half of the quarter, resulting in a buy ratio of nearly 4-to-1 and a sharp updraft in price action, as seen in the charts.

Analyst trends are also solid. The 19 tracked by MarketBeat rate the stock at a consensus of Hold, but the trends reveal increased coverage and firming sentiment, which puts a bullish bias on the data. The number of Sell ratings is in decline, while the number of Buy ratings is rising, along with the consensus price target.

The consensus price target suggests that WSM stock is fairly valued in late August, but the trend suggests otherwise. Recent revisions are leading to a new high of $330, which may be reached before the end of the calendar year.

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