NEW YORK (TheStreet) -- Shares of Deutsche Bank (DB) surged on Monday morning following the announcement that the company's co-CEOs will resign. The news-inspired upside gap lifted the stock over 5% to new June highs.
At midday, Deutsche Bank's stock was bumping up against its 200-day moving average of $32.25 while volume ran at a brisk pace. If the shares can maintain Monday's powerful early momentum, a healthy rally may be ahead.
Deutsche Bank has not had time to build much in the way of a base, but Monday's climb has left behind a solid layer of nearby support from $32 to $31.50. The stock is a buy in this zone.
A close back below the Friday low of $30.30 would be a clear warning sign that a more drawn-out bottoming formation will be needed before Deutsche Bank shares can mount a healthy rally. Past the May peak, the stock will be set up well for a run at its 2015 high set in early April at $36.20. That is a major resistance area and includes the September 2014 top. A pullback from this level is likely before it can be cleared.
A close back above the May highs at $33.35 should give Deutsche Bank investors a confidence jolt. That would also put a great deal of pressure on the shorts. Heading into this week, Deutsche Bank had a rather high short interest ratio of 5.8.Click here to see the below chart in a new window.