TD Ameritrade Holding Corp. (AMTD) shares closed lower by 10.44% on Tuesday to $39.10 after industry peers cut prices. Boston-based Fidelity Investments announced they are cutting prices 38% from $7.95 per trade to $4.95. A few hours later, San Francisco-based Charles Schwab matched the price decline to $4.95. This was Charles Schwab's second price drop this month.
Charles Schwab CFO Martinetto noted, “Let me close by reiterating the thoughts I shared at the end of the Business Update: Please don’t miss the bigger picture here. This is a company that is performing extraordinarily well. We are engaged in a growth strategy, working to drive client acquisition that drives scale, which allows us to continue to make the investments that drive more growth and more scale, all in the service of building value for both clients and stockholders. Today’s moves should be viewed in the context of that long-term focus on driving profitable growth. Commission pricing should never be an obstacle for any individual trying to determine whether to come to Schwab for their investing needs.”
TD Ameritrade currently offers $9.99 per trade and will likely have to address the price gap soon.
Price action on the AMTD daily chart shows Tuesday’s price decline gapped below the 100-day SMA. The freefall however may have just formed a bullish Gartley pattern. Point D is targeted with the 61.8% Fibonacci retracement level of the X to A leg and the 161.8% Fibonacci expansion level of the B to C move. If valid, we could see price attempt to recapture the $42.00 level. If bearish momentum accelerates, major support will come from the 200-day SMA, which currently trades around the $36.00 level.
The Trade: Buy AMTD at $38.50, with a stop loss at $37.50 and a take profit at $41.50. The Risk/Reward Ratio is 1:3