Wells Fargo (WFC) – Request report was one of three major banks to kick off earnings season on Friday and join JPMorgan Chase (JPM) – Request report and Citigroup (C.) – Request report.
Wells Fargo is down 6% from the day so far and is the worst of the bunch.
Given the rally we saw coming to the event, it’s no surprise that these bank stocks are selling out. Even with the dip, they are still big in recent weeks and months.
Wells Fargo’s earnings of 64 cents a share exceeded analyst estimates of 58 cents. However, sales missed consensus expectations.
So far, stocks have bounced off the lows during afternoon trading. Can Wells Fargo recoup more of the losses or should investors plan for more downside?
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Trading Wells Fargo
Daily chart of the Wells Fargo stock.
Chart courtesy of TrendSpider.com
At one point, stocks had fallen more than 8%, before bulls began to step in and Wells Fargo stock offered higher.
That action could push stocks back above the 10-day moving average, which would be a relatively healthy price action and demonstrate investor commitment to the bank.
We will use that observation as a way to measure Wells Fargo’s stock.
If it recovers the 10-day moving average, let’s see if the stock can get back above the $ 33.50 resistance margin and the 38.2% retracement. If possible, the recent high is on the table at $ 35, followed by a possible shift to the 50% retracement at $ 37.50.
The downside has a number of areas of interest. Like the 10-day moving average, we will use these areas to gauge investor interest in the stocks.
In other words, if Wells Fargo stocks cannot recover the 10-day moving average, traders should be open to the possibility that stocks will fill the gap at $ 31 from January 6 and test the 21-day moving average. .
If that doesn’t count as support, the USD 28 to USD 29 range is on the table.
In that zone, Wells Fargo stocks find a plethora of potential support, including the 50-day moving average, a VWAP measure, the 23.6% retracement, and a new test of the December breakout level.
Finally, if Wells Fargo is really feeling the selling pressure, the 100-day and 200-day moving averages could be a possible landing spot. Currently, those measures are just below $ 26.50.