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.
Take a look at the 1-year chart of Wells Fargo (NYSE: WFC) below with added notations:
WFC has formed a trend line of support (blue) since its October bottom. Always remember that any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its relevance. WFC has tested its trendline support 3 different times. In addition, the stock also has a regular level of support at $50 (green) that sits just below the trendline.
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The Tale of the Tape: WFC has a trendline support and a slightly lower $50 support. A long position could be entered on a pullback down to the trendline/$50 support area. A short position could be entered if WFC were to break below the trendline/$50 support area.
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!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach