Wells Fargo (WFC) – Get report was one of the top three banks that started the earnings season on Friday, joining JPMorgan Chase (JPM) – Get report and Citigroup (Ç) – Get report.
With a 6% drop in the day so far, Wells Fargo is the group’s worst performance.
Given the high we saw coming to the event, it is no surprise to see these bank shares being sold. Even with the drop, they are still up in recent weeks and months.
Wells Fargo’s profit of 64 cents per share exceeded analysts’ estimates of 58 cents. However, revenue did not meet consensus expectations.
So far, stocks are recovering from the low in the midday trading session. Can Wells Fargo recover more losses or should investors plan more losses?
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Trading Wells Fargo
Daily chart of Wells Fargo shares.
Graphic courtesy of TrendSpider.com
At one point, stocks fell more than 8%, before bulls started to step in and offer higher Wells Fargo shares.
This action could push the shares back above the 10-day moving average, which would be a relatively healthy price action and show investors’ commitment to the bank.
We will use this observation as a way to assess Wells Fargo’s inventory.
If he recovers the 10-day moving average, then we will see if the stock can return above the $ 33.50 resistance mark and the 38.2% retracement. If you can, the recent high of around $ 35 is at stake, followed by a possible move towards a 50% retracement near $ 37.50.
The downside has some areas of interest. As the 10-day moving average, we will use these areas to assess investor interest in stocks.
In other words, if Wells Fargo’s stock cannot recover the 10-day moving average, traders should be open to the possibility that the stock will fill the January 6 gap close to $ 31 and test the 21-day moving average. days.
If that doesn’t support it, then the $ 28 to $ 29 area is at stake.
In that zone, Wells Fargo’s shares find a plethora of potential support, including the 50-day moving average, a VWAP measure, a 23.6% retracement and a new test of the December break level.
Finally, if Wells Fargo really feels the selling pressure, the 100 and 200 day moving averages could be a possible landing point. These measures are currently below $ 26.50.