FBR Capital: Long-Term Chart Positive

By L.A. Little of Technical Analysis Today

After looking at Marshall & Ilsley's (MI Quote) secondary offering Monday and the effect it had on the stock price, I'd like to turn to another regional banking concern, FBR Capital Markets (FBCM Quote), which also recently priced a secondary.

Almost 13 million shares of FBR Capital were priced at $6. The chart of FBCM is positive, contrary to the chart of Marshall & Ilsley. Why is that?

Long-Term Trend Positive

Looking at the longer-term chart first, the break of the downtrend line was an obvious and positive technical development for FBR Capital. It is noteworthy since prior to that FBCM had continually traded lower since its initial public offering in June 2007 until May 2009. Once the trend line broke, volume expanded and prices subsequently worked higher. This monthly picture is much more constructive than the analysis Monday of Marshall & Ilsley .

FBR Capital Markets (FBCM) Monthly Trendline Break Source: ProphetCharts

The other longer-term developments are positive as well. In particular, there is an ascending triangle formation with the horizontal resistance line at the June 2009 swing high and again at the September 2008 swing high. Why is this positive?

In my work, it is always a positive when previous resistance points are attacked with volume. That is what we see on this long-term chart. Because this is a monthly view, it could take a few months to break those swing highs that now serve as resistance, but it is an undeniable long-term positive.

FBCM Monthly Source: ProphetCharts

The Short-Term Take

Pushing down to the daily view, we can see some short-term hesitation in the upward progression of the stock price as a result of the secondary. After peaking at $7.25, the price came down hard once the secondary news made the rounds. That created the large gap down to the sub-$6 range. The gap back up occurred once the pricing was announced. Clearly, the market was relieved at the $6 price tag.

FBCM Daily Source: ProphetCharts