Pattern Group and Ethos Technologies show 2 bullish technical setups

Two recent IPOs are showing technical patterns pointing to potential gains of 36% to 48%, even as investors await a SpaceX public offering. "These newer names have avoided the speculative frenzy tied to high-profile IPOs, yet they demonstrate constructive technical patterns that deserve closer attention," said Doug Busch, senior technical analyst at Barron's Investor Circle.

Pattern Group, an e-commerce software platform that listed in September, has been higher 10 of the last 13 weeks and recently formed a bullish golden cross, with its 50-day simple moving average crossing above its 125-day moving average. The stock surged 19% on May 7 after earnings and cleared a double-bottom pivot at $16.61. Ethos Technologies, a digital life insurance platform that debuted in late January, is down 46% from its May 7 peak but is approaching its upward-sloping 50-day moving average for the first time since breaking above a $14.07 double-bottom pivot on April 13.

The Renaissance IPO ETF, a proxy for new-issue liquidity, has risen 6 of the last 8 weeks including gains of 10% and 8%, a sign of risk appetite that could support further upside in recently public names. Busch sees Pattern Group reaching $27 by year-end, a 48% gain from around $18, and Ethos Technologies hitting $24 by the third quarter, a roughly 36% advance from about $18.50.

Pattern Group's Golden Cross Signals Momentum

Pattern Group has not recorded back-to-back losing sessions over the last month and trades 9% below its annual peak. The stock outperformed software peers on a ratio chart against the iShares Expanded Tech-Software ETF. Round number theory came into play near the $10 level, where two bullish morning star patterns completed on Feb. 25 and March 10, leading to gains of 12% and 10%, respectively. Volume has accelerated meaningfully over recent weeks, beginning with the well-received earnings reaction on May 7 that sent the stock up 19% while clearing the $16.61 double-bottom pivot. The golden cross that formed this month, with the 50-day moving average moving above the 125-day moving average, is a pattern often associated with sustained upward momentum. Busch advises remaining bullish above $16.

Ethos Technologies Nears Key Technical Retest

Ethos Technologies is undergoing a soft period common for new issues shortly after going public, falling 46% from its May 7 peak. The stock has underperformed the iShares U.S. Insurance ETF over the last month, as that fund forms a long bullish ascending triangle. A doji candle at the key $30 level marked the start of the recent pullback. The stock is now approaching its upward-sloping 50-day simple moving average for the first time since breaking above the double-bottom pivot at $14.07 on April 13. Technical traders often view this type of retest as an optimal entry point. The depth of the base is notable, with multiple doji candles forming at the $10 level. Busch sees the potential for a move toward $24 by the third quarter, representing roughly a 36% gain from current levels, and advises remaining bullish above $15.

This article is for informational purposes only and does not constitute investment advice.