Why Wells Fargo Lags Bank of America, Citigroup, JPMorgan -- Check the Charts

Third-quarter earnings reports were better than expected for the four "too big to fail" money center banks -- Bank of America (BAC) , Citigroup (C) , JPMorgan Chase (JPM) and Wells Fargo (WFC) . The laggard remains Wells Fargo, given the fallout from its cross-selling scandal. Both Citi and Wells Fargo are Action Alerts PLUS holdings.

All four have positive weekly charts, but three have overbought momentum. Regardless of the political outcome on Nov. 8, the biggest banks face the risk of efforts to eventually break them up, or to increase regulations designed to help prevent systemic risks.

Here's a scorecard for the four "too big to fail" banks.

 

Citigroup and Wells Fargo are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells C or WFC? Learn more now.

Bank of America is up 50.1% since its Feb. 11 low of $10.99, and the stock has a positive but overbought weekly chart. BofA reported earnings on Oct. 17 and beat analysts' estimates.

Citigroup is up 42.4% since its Feb. 11 low of $34.52. The stock has a positive but overbought weekly chart. The stock has been trading back and forth around its 200-week simple moving average since the week of Oct. 7, with this average now at $49.25. Citigroup reported earnings on Oct. 14 and beat analysts' estimates.

JPMorgan Chase is up 31.9% since its Feb. 11 low of $52.50. The stock has a positive but overbought weekly chart. Our nation's largest bank reported earnings on Oct. 14 and beat analysts' estimates.

Wells Fargo set its 2016 low of $43.55 on Oct. 4 and is just 5.6% above this low. The weekly chart ended last week positive and needs a close this week above its key weekly moving average of $46.04 to stay that way. The banking giant reported earnings on Oct. 14 and beat analysts' estimate by just a penny a share.

Here's the daily chart for Bank of America.

 

Courtesy of MetaStock Xenith

The horizontal lines on the daily chart for Bank of America are the Fibonacci retracements from the July 22, 2015, high of $18.48 to the Feb. 11 low of $10.99.

Note that the stock has been above a "golden cross" since Sept. 7, when the 50-day simple moving average rose above the 200-day simple moving average, indicating that higher prices were ahead. The stock set its 2016 high of $17.10 on Oct. 27. As the "golden cross" was confirmed, the stock was trading around its 61.8% retracement of $15.62.

Investors looking to buy the stock should consider doing so on weakness to $16.12, which is a key level on technical charts until the end of this week. Investors looking to reduce holdings could have done so when the stock filled the gap to its Dec. 31 low of $16.83. The $21.40 level is a key level on technical charts until the end of 2016.

Here's the daily chart for Citigroup.

 

Courtesy of MetaStock Xenith

The horizontal lines on the daily chart for Citigroup are the Fibonacci retracements from the July 23, 2015, high of $60.95 to the Feb. 11 low of $34.52.

The stock has been above a "golden cross" since Sept. 9, when the 50-day simple moving average moved above its 200-day simple moving average to indicate that higher prices were ahead. The stock was trading around its 50% retracement of $47.72 at the time of the "golden cross." The 2016 high of $50.60 set on Oct. 27 was shy of the 61.8% retracement of $50.84. The stock remains below the price gap to the Dec. 31 low of $51.75.

Investors looking to buy the stock should consider doing so on weakness to $46.14, which is a key level on technical charts until the end of 2016. Investors looking to reduce holdings should consider selling strength to $51.75, which fills the price gap to the Dec. 31 low.

Here's the daily chart for JPMorgan.

 

Courtesy of MetaStock Xenith

The horizontal lines on the daily chart for JPMorgan are the Fibonacci retracements from the July 23, 2015, high of $70.61 to the Aug. 24, 2015, low of $50.07.

The stock has been above a "golden cross" since June 3, when the 50-day simple moving average rose above its 200-day simple moving average, indicating that higher prices were ahead. Investors had to be patient with this signal, as the stock traded as low as $59.26 on June 27, vs. its 38.2% retracement of $57.89. The "golden cross" was still in play when the stock set its 2016 high of $69.77 on Oct. 27, well above the 61.8% retracement of $62.74.

Investors looking to buy the stock should consider doing so on weakness to $66.97 and $55.45, which are key levels on technical charts until the end of 2016. Investors looking to reduce holdings should consider selling strength to $78.20, which is a key level on technical charts until the end of 2016.

Here's the daily chart for Wells Fargo.

 

Courtesy of MetaStock Xenith

The horizontal lines on the daily chart for Wells Fargo are the Fibonacci retracements from the July 23, 2015, high of $58.07 to the Oct. 4 low of $43.55.

There was a major negative warning for this stock as early as Sept. 25, 2015, when a "death cross" was confirmed. A "death cross" occurs when the 50-day simple moving average falls below the 200-day simple moving average to indicate that lower prices lie ahead. Testing the 200-day simple moving average between Oct. 29, 2015, and Dec. 30, 2015, provided a selling opportunity around $55 a share. The "death cross" remains in play, with the stock below its 23.6% retracement of $47.14.

Investors looking to buy the stock should consider buying weakness to $40.95, which is a key level on technical charts until the end of this week. Investors looking to reduce holdings should consider selling strength to $49.33 and $49.40, which are key levels on technical charts until the end of 2016.

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

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