Avoid TD Ameritrade as It Crashes Through Critical Support - TheStreet

TD Ameritrade (AMTD) - Get Report has had a rough week. Even though it's only Wednesday, shares are down almost 29% in the past three days. 

While Wednesday's 3.25% decline to $33.54 -- its lowest level in almost three years -- isn't helping matters, Tuesday's more than 25% plunge dealt a devastating blow to the charts.

We had to zoom out to a multi-year timeframe to see where AMTD stock may find some buyers, although few have materialized over the last few days. Shares now sit below a critical support level as investors worry about potentially lower prices.

On Tuesday, Charles Schwab (SCHW) - Get Reportannounced free trading commissions to its retail customers. TD Ameritrade quickly followed suit, announcing that the move would reduce quarterly revenue by about $220 million to $240 million.

E-Trade (ETFC) - Get Report , Interactive Brokers (IBKR) - Get Report and others have been under pressure over the past few trading sessions as well. Let's look at the charts.

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Trading TD Ameritrade Stock

Weekly chart of TD Ameritrade stock.

TD Ameritrade stock is now trading at its lowest levels since the fourth quarter of 2016. Just think about that for a minute.

Because of the incredible decline the stock has experienced, shares quickly fell to a really critical level at $35. If bulls were prepared to make a stand, they would have held this mark with a little more intensity.

Instead, AMTD stock went through the $35 mark like a hot knife through butter -- at least on the weekly chart.

The silver lining is that bulls still have two more trading sessions to fix this development and repair some of the technical damage. If TD Ameritrade can close above $35, then bulls may be able to garner some upside momentum for a bounce.

Below that mark, though, and this name looks too dangerous to own.

So what's the trade? Keep a close eye on $35. If TD Ameritrade stock closes below it this week, see if it reclaims it next week. Above $35 and AMTD stock can get a dead cat bounce going. Otherwise, below $35 and the low $30s could be in the cards.

It would be very concerning to see TD Ameritrade stock spending considerable time below $35, increasing the odds that this level goes from possible support to resistance. Its inability to act as support so far this week should be deeply concerning to investors.

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.