InterDigital is an interesting company. It's a member of the IGV Software ETF , but StockCharts classifies it as a Semiconductor company. Upon further digging, though, it's neither: InterDigital actually is a patent licensing company that invents wireless and video technologies like 5G and Wi-Fi and collects royalties from device makers without making any physical products. It just gets classified into software since it doesn't make hardware. Regardless, it stands out to me because it is close to breaking out, despite the general underperformance in growth names in recent months. It's not as though InterDigital has been completely immune to sell-offs. In fact, the stock has been working to recover after enduring a near-30% decline in early 2026. But by stabilizing and then regrouping constructively, Interdigital has now traced out a bullish inverse head-and-shoulders pattern with an upward-sloping neckline. Rising resistance Patterns with a rising resistance line can sometimes be more challenging to resolve, since they require a steady and sustained advance for the stock to clear — and then remain above — the breakout zone. But the setup could be worth the patience, as the measured move projects an upside target of roughly 20% higher, near $462, which would place the stock meaningfully above its October 2025 high. From a trade-management perspective, this structure remains valid as long as InterDigital holds above $343, the low of the pattern's right shoulder. That level serves as the natural stop-loss point, which is typically how we manage chart-related trade ideas for CappThesis clients. In other words, as long as the technical pattern that prompted the trade remains intact, we stay with the position. If that foundation is violated, however, we simply cut the loss and move on to the next opportunity. Bullish formations Zooming out to the three-year chart on a log scale shows just how effectively InterDigital has leveraged similar bullish formations in the past. While these setups may not appear especially dramatic from this perspective, many of them actually consisted of multiple months of price action — very similar to what InterDigital has been constructing recently. As shown, the stock has repeatedly done a strong job of not only breaking above key resistance but also producing upside follow-through that lasted for multiple weeks and sometimes multiple months. In many cases, the stock achieved its measured-move target and then extended beyond it. Of course, past performance does not guarantee future results, but there is something to be said for a stock that consistently displays and capitalizes on technical characteristics that have worked well before. In other words, stocks tend to develop personalities. Up to this point, InterDigital's personality has been to consolidate for weeks/months, form a higher low within a longer-term uptrend, build a constructive bullish pattern, and eventually break out from it. The potential breakout now does not have to happen immediately, as discussed above, but if it does occur, it could have meaningful implications for both the short- and long-term technical picture. Here's an alternative view of the same period, this time highlighting the key weekly moving averages (13-week, 26-week, and 40-week) along with a 14-week RSI in the bottom panel. One notable feature is how often the stock has managed to bottom once the RSI drifts toward the midpoint of its range. That tells us the pullbacks — while sometimes lasting several weeks — have generally not been overly damaging from a weekly perspective. Instead, they have allowed the stock to stabilize, form another bullish pattern and eventually break out. Meaningful upside It is also clear that many of the rallies that began with the RSI near the middle of its range eventually pushed the indicator into overbought territory, and sometimes even extreme overbought readings, which then persisted for multiple months. At the moment, IDCC has rebounded from its lows of a few months ago, pulling the 14-week RSI back above the 50 level but still well short of overbought. In other words, there could still be meaningful upside runway if the stock eventually breaks out and follows a path similar to prior advances. From a moving-average perspective, nearly every pullback found support near the cluster formed by the 13-, 26-, and 40-week lines. After stabilizing around that area, the stock typically pushed back above those averages and remained there for months before the next consolidation phase began. The bottom line is that the blueprint has already been established for InterDigital. Given the consistency of this behavior over the past several years, the key now is whether the stock can once again take advantage of that structure and demonstrate that the characteristics of the longer-term uptrend remain firmly in place. — Frank Cappelleri Founder: https://cappthesis.com DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE 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.
