Northern Trust (NTRS) is extending Monday's pre-earnings rally. The stock is up another 2% Tuesday following this morning's earnings report and is beginning to pierce a major resistance zone. NTRS has struggled with this area, just below $91.50, since early December. Once this heavy supply area is convincingly taken out, the stock will be set up well for a fresh rally leg.
After bumping up against the $91.50 area at the December and early January highs, NTRS suffered a major blow. An earnings-inspired breakdown gap on Jan. 21 drove shares 4.2% lower. Despite the powerful downside momentum in place, NTRS held a major support zone during the aftermath. This key area, between $83.00 and $82.00, held well. The January, February and March lows are near this zone. After NTRS first held this zone, the stock began to consolidate rather than enter a fresh down leg.
A clear break above the upper band of the five-month consolidation pattern would leave behind another major support zone. As this develops, NTRS investors should consider this A- rated stock a low-risk buy between $90.00 and $88.00. An important near-term hurdle will be the stock's all-time highs set back in 2000 at $92.15. A bit of chop before this level is cleared is likely.
On the downside, a close back below $87.00 would send a clear warning sign that overhead resistance near the January peak remains in control.
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