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Is Wells Fargo the New Go-To Bank Stock After Earnings Rally?

Wells Fargo is ripping higher on earnings, hitting new 52-week highs. Is it time to buy this as the go-to bank stock?

Wells Fargo  (WFC) - Get Wells Fargo & Company Report started off lower on the day but shares have risen almost 6% after the company reported earnings.

The company was joined by JPMorgan Chase  (JPM) - Get JPMorgan Chase & Co. Report and Goldman Sachs  (GS) - Get Goldman Sachs Group, Inc. Report as the trio kicked off this quarter’s earnings season.

Like Wells Fargo, Goldman Sachs also started off lower on the day before pushing higher, while JPMorgan stock was about flat after also opening lower.

Wells Fargo beat on analysts’ expectations for earnings and revenue.

The top- and bottom-line beat also comes after the bank previously announced it had cleared all of its exposure to Archegos Capital.

While Wells Fargo has been trading better lately it’s lagged many of its peers amid the recovery. Will that give it some extra momentum after its post-earnings rally? Let’s look at the charts.

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Trading Wells Fargo

Weekly chart of Wells Fargo stock.

Weekly chart of Wells Fargo stock.

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Coming into Wednesday, JPMorgan and Goldman Sachs were two of the better-looking bank stocks out there. Wells Fargo has been trading better lately too, but has yet to recoup its losses from 2020.

Wells Fargo stock has been incredibly reactive to its Fibonacci retracements, moving from one area to the next. Most recently, shares were struggling with the 50% retracement, along with the 200-month and 100-week moving averages.

Bulls ultimately prevailed, clearing all of these levels and racing to the 61.8% retracement.

Wells Fargo stock is also giving bulls a monthly-up rotation, by clearing the March high at $41.54.

So where do we go from here? It seems like too much to ask for the 61.8% retracement to hold as support, given how close it is to the current price. However, if it does hold, that’s incredibly bullish moving forward.

If it fails, I want to see $40 and the 200-month moving average hold as support, along with the 10-week moving average. As long as the 10-week can guide the stock higher, bulls will maintain momentum.

A break of $37 is very bad news for longs.

On the upside, let’s see if we can get a further extension, putting the 200-week moving average in play near $45.50, followed by the 78.6% retracement just below $47.

For now, continue using the 61.8% retracement and the March high as the levels to watch.