Bank of America
Heading into earnings, BAC -- like many of the large-cap financial stocks -- has lagged the market badly. If the stock reacts well to earnings, BAC should have resistance at the underbelly of the broken short-term uptrend line. If the stock rallies, look for resistance at around $18. If the stock reacts poorly to earnings, then BAC may slice through first support at $15.85 and test the $14.12 area.
I would look to buy BAC if it reacts poorly to the earnings report in the morning. The ideal entry points for BAC would be the horizontal line support at $14.12.Morgan Stanley
Morgan Stanley has a much more interesting chart than that of BAC. MS broke above its long-term downtrend line and has managed to stay above it since early October. If the stock reacts favorably to earnings, look for resistance at the $33.27 level in the short-term and then $35.74. If MS trades lower, $29.12 represents a convergence of horizontal line support and the intermediate-term uptrend line. Below that level, there’s no real support until around $27.50.
The MS chart is one of the best I’ve seen in the financial sector. The stock can be bought on any pullback to the uptrend line at around $29.12 with a stop loss in place on any close below $28.75.
Wells Fargo is the least attractive of the three financials featured today. Without any trend lines in place, horizontal lines are all we have to determine support and resistance levels. A positive reaction to earnings will likely bring WFC up to resistance at either $29.39 or $31.38. If the stock trades lower, that will likely lead to a test of support at $25.32. I wouldn’t want to be in this stock heading into this report -- there’s no edge here from a technical perspective. In this case, I'd rather fade (go the opposite way of) any extreme move in WFC off of this earnings report.
I'd look elsewhere in the financial sector for more appealing technical setups; this stock chart doesn’t provide any edge presently.
EBay was looking awfully vulnerable prior to Tuesday’s trading. A nice rounding top was forming with lower prices soon to come. Then, suddenly, Tuesday’s rally carried eBay with it and gave the stock enough juice to form a bullish engulfing candle. That formation nearly always has short-term bullish implications -- but with earnings due out after the bell, anything’s possible. A positive reaction to earnings may take EBAY up to 52-week highs at around $25 -- which would also correspond with a test of the long-term downtrend line resistance (see blue line on chart). A negative reaction to earnings may take eBay down to its rising 200-day moving average currently at $20.68. That move lower, if it happens, may take more than a day, so be patient with entries until the stock works its way down to the MA line.
Like Wells Fargo, EBay doesn't offer a great technical picture. You may want to look elsewhere (like IBM
(IBM) on a pullback) for better long plays.For more trading ideas from top professional traders take a two week FREE trial to our Buzz & Banter. You'll get real-time ideas and insights unavailable anywhere else. Learn more.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.