Wells Fargo & Co (NYSE: WFC)

Wells Fargo & Company provides retail, commercial, and corporate banking services to individuals, businesses, and institutions. The company’s Community Banking segment offers checking and market rate accounts, savings and time deposits, individual retirement accounts, and remittances; and lines of credit, auto floor plan lines, equity lines and loans, equipment and transportation loans, education and residential mortgage loans, and credit and debit cards. Its Wholesale Banking segment offers commercial loans and lines of credit, letters of credit, asset-based lending, equipment leasing, international trade facilities, trade financing, collection, foreign exchange, treasury management, investment management, institutional fixed-income sales, interest rate, commodity and equity risk management, insurance, corporate trust fiduciary and agency, and investment banking services, as well as online/electronic products. The company’s Wealth, Brokerage, and Retirement segment offers financial advisory, wealth management, brokerage, retirement, trust, and reinsurance services.

To review Wells’ stock, please take a look at the 1-year chart of WFC (Wells Fargo & Company) below with my added notations:

1-year chart of WFC (Wells Fargo & Company)

WFC has been trending higher since October, and during that time, the stock has been climbing a trendline of support (blue). Over the last 2 months though, the stock has formed at 52-week high resistance at $50 (red). At some point WFC will have to break one of those two levels.

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The Tale of the Tape: WFC has a $50 resistance and an uptrend line of support to watch. A long trade could be made on either a pullback down to the trendline, which currently sits near $48, or on a break through the $50 resistance. A break below the trendline support should lead to lower prices.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach