Wells Fargo & Company (WFC) has missed the earnings per share (EPS) estimates in each of the last four quarters. The stock bottomed at $22.00 on May 13, but its weekly chart remains negative.
The stock is down 54.3% year-to-date and in a bear market territory at 55.1% below its 52-week high of $54.75 game on Nov. 29. The stock is up 11.7% since the May 13 low of$22.00.
Wells Fargo stock has a P/E ratio of 20.79 and a dividend yield of 8.18%, according to the trends. The bank is the third largest of the four money center banks that are considered ” too big to fail.
The state of the banking system based on the FDIC data for the first qauarter 2020
The Federal Deposit Insurance Corporation (FDIC) Quarterly Banking Profile (QBP) for the first quarter of 2020 shows that the Deposit Insurance Fund (DIF) was $110.3 billion in assets to protect $8.17 billion of dollars of insured deposits. The QBP shows that the total real estate loans increased to $ $4.19 trillion in the first quarter, still 0.7% below its level at the end of 2007. Real estate lending is therefore as a brake on the U.S. economy.
The most notable is that home loans are falling every quarter since the end of 2007, in spite of the re-inflated bubble in home prices. This category of loans is down 43.7% since the end of 2007. Construction and development loans to fund new communities and home builders, while rising in recent quarters, are still down 42.5% since the end of 2007. The category of loans to worry about now is the non-farm non-residential loans, up from 56.3% since the end of 2007. This is where the problem loans could hurt the banking system.
The daily chart of Wells Fargo
The daily chart of Wells Fargo shows the formation of a death cross, on the 4th of March, when the 50-day simple moving average fell below the 200-day simple moving average to indicate that the price decrease will follow. This sell signal, the tracking stock of its May 13 low of$22.00.
The stock is trading between its monthly value level at $22.03 and its quarterly risky level at $28.65. The 50-day and 200-day simple moving average of $26.39 and $39.57, respectively.
The weekly chart of Wells Fargo
The weekly chart of Wells Fargo is negative with the stock below its five-week modified moving average at $26.36. The stock is below its 200-week simple moving average, or the return to the average, to $49.96.
The 12 x 3 x 3 weekly slow stochastic reading should slide 31.64 this week, down from 32.87 17 July. During the week of 22 May, that reading was below 10.00, which makes the stock technically too cheap to Ignore. At its January, this reading has been above 90.00, which has the stock in a tire parabolic bubble formation. This has led to the decline of the declining market.
Trading strategy: Buy Wells Fargo stock on the weakness of the monthly value level of $22.03. Reduce holdings on strength to the quarterly risky level at $28.65.
How to use my value levels and risky levels: The share price closing price on Dec. 31, 2019, has been an entry to my proprietary analytics. The annual levels of to remain on the charts. The level of the month of July was based on the last nine-month period firm, the third quarter was based on the last nine quarterly closes, and the second half by 2020 the level was based on the last nine to the half-year closes. New weekly levels are calculated following the end of each week.
My theory is that nine years of volatility between the farm are to assume all possible bullish or bearish event for the stock are taken into account. To capture the volatility of stock prices, investors should purchase shares of the weakness of a plan, the value and reduce the holdings of the strength to a risky level. A pivot is a level value of the risk level that was violated in its time horizon. Hubs act as magnets that have a high likelihood to be re-tested prior to their time horizon expires.
How to use 12 x 3 x 3 weekly slow stochastic readings: My choice of using 12 x 3 x 3 weekly slow stochastic readings has been based on the backtesting of many methods of reading the stock prices of the momentum with the objective of finding the combination that resulted in the least number of false signals. I’ve been following the stock market crash of 1987, so I was happy with the results of more than 30 years.
The stochastic reading covers the duration of 12 weeks, high, low, and close for the stock. There is a row of calculation of the difference between the highest and the lowest compared to the farm. These levels are modified for a fast reading and slow reading, and I found that the slow playback will work best.
The stochastic reading scales between 00.00 and 100.00 with readings above 80.00 considered as overbought and readings below 20.00 regarded as oversold. A reading above 90.00 is considered to be a “swell parabolic bubble” of the training, which is usually followed by a decline of 10% to 20% over the next three to five months. A reading below 10.00 is considered to be “too cheap to ignore,” which is usually followed by a gain of 10% to 20% over the next three to five months.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.