Shares of Wells Fargo (WFC) - Get Wells Fargo & Company Report are in full breakdown mode today. The stock is off over 2% and is now trading below last week's low. This is the stock's third straight loss as an ominous near-term high is beginning to take shape.
For Wells Fargo investors, lower entry opportunities may be just around the corner.
Wells Fargo's collapse after the close of trade on Dec. 31 drove shares over 18% lower in less than six weeks. Wells Fargo fell well below its 2015 low during this phase before finally reaching a bottom just below $45. The stock mounted a healthy rebound off this level as shares dipped to a deeply oversold reading. This recovery move carried Wells Fargo back up to heavy resistance near the September/October lows. Throughout March, the stock has been battling this zone, between $49.50 and $50, with little success. As this week began, Wells Fargo appeared to be about to break through. The stock closed at fresh March highs on very heavy trade. The failure to extend Monday's bullish action is a now looking fairly ominous.
With Wells Fargo now reversing from Monday's gain, an ugly high is forming. After putting in a new weekly high, the stock is now trading below last week's low. This key downside reversal will likely take some time to play out. In the near term, bullish Wells Fargo investors should expect lower prices. Initial support is in place near the January/March lows between $47.15 and $46.90. Until this key zone is reached, Wells Fargo will remain soft.
From a fundamental perspective, Wells Fargo is a holding in Jim Cramer's Action Alerts PLUS charitable trust portfolio. Cramer and Research Director Jack Mohr said that despite Wells Fargo's performance today, they remain confident in the stock going forward. They wrote:
"As for Wells Fargo, shares are trading lower today on a UBS analyst report that rated the stock as a "Sell," with a $45 price target. The report called out concerns about the higher relative multiple attributed to WFC shares over its peers, especially given a tough macro-economic backdrop. However, we remain confident in WFC, in part due to their incredible management team (which UBS also commends)."
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Disclosure: This article is commentary by an independent contributor. At the time of publication, the author was long WFC.