Shares of CME Group Inc. (CME) have been underperforming the S & P 500 index since the April market low. While the S & P was making higher highs and higher lows in August and September, CME was breaking down through key support levels. But a recent breakout tells us that CME has now entered a new accumulation phase, meaning much further upside potential for this futures trading play. After breaking below its 50-day moving average in August, CME then tested its 200- day moving average around $257. All through September and October, the price continued to bounce off the 200-day moving average while confirming price support at the early September low. Through the month of October, this consolidation phase saw the Relative Strength Index (RSI) oscillate between the 40 and 60 levels. With flat moving averages, along with neutral readings from the RSI, CME was demonstrating a classic sideways trend with lack of strong momentum. Earlier this month, a break above short-term resistance around $275 was confirmed with a strong upward move in the RSI. With stronger price action combined with improved momentum readings, CME appeared to have exited the consolidation period and entered a new accumulation phase. During that consolidation period in October, we noticed that the Chaikin Money Flow (CMF) was consistently above the zero level. This suggested that although the price action was still sideways, the volume was indicating more bullish sentiment due to stronger volume on higher closes. A steady uptrend in the Accumulation-Distribution Line also confirmed this positive volume reading, suggesting a sort of “stealth bull phase” for CME as investors were accumulating shares during the consolidation period. The weekly chart shows how this recent test of moving support fits into a long-term secular uptrend for CME. As the price pulled back to the 40-week moving average, very similar to the 200-day moving average, the weekly RSI remained above the important 40 level. The weekly PPO indicator just experienced a bullish crossover, confirming a successful upturn and a new accumulation phase for CME Group. We’re noting a number of similarities between the current upswing and the breakout back in August 2024, where a push above trendline resistance led to much further upside in the months to come. Given the short-term breakout and supportive volume readings, combined with a bullish configuration on the weekly chart, we could see much further upside potential for this financial infrastructure play. -David Keller, CMT marketmisbehavior.com DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
