We recommend opening a new bullish trade on Wells Fargo (WFC) as traders position themselves for earnings season, which kicks off this week. WFC will be reporting Tuesday, Jan. 13, and we expect to see a positive surprise. Although we are buying some extra time, we will want to be flexible with the trade. If the Wells Fargo stock price breaks out sufficiently before earnings, it may make sense to pull any profits as soon as later in Monday’s session. Otherwise, we expect a chance to hang on for a new extension of the current trend.
We waited to take a trade in this group until the Fed minutes had been released and we could get a feel for its impact on bond prices and yields. So far, that looks to be in favor of much higher prices among the big financials, and Wells Fargo stock price could follow the recent breakout on Bank of America (BAC) in the near term.
‘Buy to open’ the WFC March 46 Calls for a maximum price of $1.10.
In addition to Wells Fargo’s earnings, other figures we’re watching this week include retails sales on Jan. 14, and the Producer Price Index (PPI) and Beige Book, both on Jan. 15.
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