Heading into Canadian bank earnings week. Itâs interesting to see that the relative strength of some of the largest U.S. banks has been improving lately. After steadily dropping down the relative strength rankings in the SIA S&P 100 Index Report through 2022 and early 2023, Wells Fargo & Comp (WFC) bottomed out deep in the red zone in April of 2023.
For the last ten months, WFC has steadily been clawing its way back up the rankings. It left the red zone in December and has been moving up withing the Yellow Neutral Zone since then. On Friday, WFC finished in 29th place after climbing 3 spots in the day. Wells Fargo is currently sitting three spots outside of the green zone where it has not been since December of 2022.
Candlestick Chart Shows Increasing Accumulation:
Wells Fargo (WFC) spent 18 months, from April 2022 to October 2023 stuck in a sideways trading range between $34.00 and $46.00. Since November, the shares have been under renewed accumulation. In December, they broke out of a bullish Ascending triangle base, and following a few weeks of consolidation where the $46.00 breakout point reversed polarity to become support, the shares have started to rally again, advancing on $54.00 for the first time in two years.
Initial upside resistance appears at the early 2022 peak near $57.00, followed by the $58.00 to $60.00 range, then closer to $70.00 based on measured moves. Initial support appears between the 10-week moving average near $49.50 and the $50.00 round number.
Point and Figure Chart Catapults Upward:
Wells Fargo (WFC) shares spent nearly all of 2022 and 2023 drifting listlessly in a sideways range between $34.50 and $46.50. Back in October-November, a downswing was contained by a long-term 45-degree uptrend support line. Since then, the shares have been under renewed accumulation, staging two bullish Double Top breakouts and rallies with only a 3-box correction between them; a classic Bullish Catapult.
Trading at their highest level in two years, next potential resistance for WFC appears at the February 2022 peak near $56.85, followed by the $64.00 to $65.30 zone where vertical and horizontal counts converge. Initial support appears near $49.50, just below the $50.00 round number, where a 3-box reversal and recent breakout point converge.
With a perfect SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 10 out of 10, WFC is exhibiting short-term strength across the asset classes.
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