Fifth Third Headed Even Lower, Proceed With Caution

NEW YORK ( TheStreet) -- Fifth Third Bancorp  (FITB) may be leaving behind a significant high. On Monday, its shares closed with a 0.8% loss on its heaviest downside trade since the January meltdown. The stock saw heavy selling on Friday, as well, and is now in a vulnerable position.

Fifth Third will likely head lower in the near term and will soon test a very solid support area near $19.70. If the stock fails to hold near its 50-day/200-day moving average intersection, a deep selloff reminiscent of January's meltdown could be on the way.

Two weeks ago, Fifth Third closed at fresh 2015 highs. The May 19 settle at $20.95 also lifted the stock above the multi-week highs of December. Despite this impressive move, volume remained well below its average. The next day, the stock got hit with a downgrade, prompting it to spike and suffer a 2.25% loss. This sharp reversal from the previous session's new 2015 highs continues to weigh on the stock.

In order for the powerful bull trend that began in early February to remain intact, Fifth Third's ability to hold near the 50-day/200-day moving averages is key. Patient bulls should look to take advantage of a dip down to the $19.60 area.

This trade includes a dose of caution, considering the ominous topping action that is now in place near last month's high. If the 200-day fails to hold, a much deeper pullback could quickly develop.

Click here to see the below chart in a new window. 

At the time of publication, Morrow had no positions in the stocks mentioned.

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