FUNDAMENTALLY: BAD SITUATION ALREADY - HOW MUCH WORSE CAN IT GET?
Poor business and regulatory practices are being investigated at WFC. This bodes negatively for the bank, as there is already an admittance of wrongdoing. Such situations have taken a while to sort out in the past (see GS, Citi, DB, BNP, etc.) and have resulted in substantial settlement amounts. The current situation with Deutsche Bank adds fuel to the fire.
WEEKLY CHART REFLECTING POOR FUNDAMENTALS.
The technical situation on the weekly chart looks quite poor: Negative wedge formation since July 2015, death cross in April 2016, downtrend broken this week, volume pickup on the downside, negative MACD cross-over, etc.
FLOW SITUATION ALSO DIFFICULT.
Warren Buffet, who already owns 10% of the bank through Berkshire, cannot buy more stock. He is bound to keep his investment and be unhappy with it or sell his stake... Not very encouraging from the perspective of institutional share-holding at WFC.
WHAT TO DO FROM HERE?
Go short at the current market price.
Price target $40/share.
Stop-loss at $46.
Reward/Risk = c. 2.7x
Poor business and regulatory practices are being investigated at WFC. This bodes negatively for the bank, as there is already an admittance of wrongdoing. Such situations have taken a while to sort out in the past (see GS, Citi, DB, BNP, etc.) and have resulted in substantial settlement amounts. The current situation with Deutsche Bank adds fuel to the fire.
WEEKLY CHART REFLECTING POOR FUNDAMENTALS.
The technical situation on the weekly chart looks quite poor: Negative wedge formation since July 2015, death cross in April 2016, downtrend broken this week, volume pickup on the downside, negative MACD cross-over, etc.
FLOW SITUATION ALSO DIFFICULT.
Warren Buffet, who already owns 10% of the bank through Berkshire, cannot buy more stock. He is bound to keep his investment and be unhappy with it or sell his stake... Not very encouraging from the perspective of institutional share-holding at WFC.
WHAT TO DO FROM HERE?
Go short at the current market price.
Price target $40/share.
Stop-loss at $46.
Reward/Risk = c. 2.7x
Trade active:
WFC still all over the news. Staying short.
Today downgraded by Raymond James from Market Perform to Underperform.
Today downgraded by Raymond James from Market Perform to Underperform.
Comment:
Dead cat bounce? Staying short as long as it closes below $45. Maintain stop loss at $46.
Trade closed: stop reached:
$46 stop reached. Trade closed.