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Today’s Trading Edge: Wells Fargo – Positive Earnings and Guidance May Help this Stock Maintain an Upside Bias

Posted by Edward Moya on Apr 11, 2014 12:52:00 PM

WWM WELLS FARGO APRIL 11 2014

Shares of Wells Fargo rallied after first quarter earnings were released this morning.  Increased equity investments, expenses declined, and their asset quality has improved.  Most of the key data points beat analysts’ expectations, with Q1EPS $1.05 vs $0.97 and Q1 Revs. $20.63B vs $20.60B. 

Loan growth and deposit growth are looking optimistic for the rest of the year.  Double digit growth over 2013 and the increase in dividends may help keep this stock maintain its longer term bullish trend.

Price action on the daily chart is tentatively respecting the 50-day SMA and a bullish Gartley pattern which can be identified on a four-hour chart.  If we see an early selloff in equities at the start of next week, we may see limited downside on WFC.  Key support coming from the 200-day SMA at $44.30.  Longer term upside targets include the $70 level. 

The trade: Buy WFC at $48.50 with a stop loss at $44.00 and a take profit at $57.50.  The Risk/Reward Ratio is 1:2

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

 

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