Log On to TD Ameritrade’s Rising Fortunes (AMTD)

by Serge Berger | July 2, 2014 8:05 am

The financial sector of the S&P 500 participated nicely in Tuesday’s quarter-start equities rally. The broker/dealer stocks — among them TD Ameritrade (AMTD[1]) — also showed good strength, and now AMTD stock is positioned for a potential move past multiweek resistance — one that active traders and investors could consider hopping on.

I often discuss that a healthy tape more often than not sees good participation by the financial sector, and while I continue to feel that in the broader sense U.S. equities are in the very late innings of this current cyclical bull market, the financial sector of the S&P 500 — as measured by the Financial SPDR (XLF[2]) — still looks good for one more push higher.

Note that the XLF has been consolidating in a higher base over the past three weeks or so, and although the ETF failed to close at a new year-to-date high yesterday, its tight formation with good support suggests the run isn’t over just yet.

XLF charts
Click to Enlarge

Of course, the financial sector is well-diversified and thus not all financial stocks are created equal. The broker/dealer stocks, however — including the discount broker names like TD Ameritrade — are looking itchy to break higher from a trading perspective. The company is scheduled to report its next earnings in three weeks’ time, on July 22, and looking at the broader market as well as the two-year weekly chart of AMTD stock, I can’t help but wonder if this earnings season will bring about some “sell the news” reaction.

AMTD Stock Charts

Note that in April AMTD stock broke its 2013 uptrend. However, the stock managed to hold its 200-day simple moving average (red) in April and again in May and thus offers clearly defined risk for active investors wanting to try the stock on the long side for a bounce to a lower high.

AMTD stock charts multiyear
Click to Enlarge

On the daily chart, we see the series of bullish candles (green arrows) that AMTD stock left behind during the past three months. Over the past couple of weeks, TD Ameritrade has consolidated below its 100-day moving average (blue line), which also created a horizontal line of resistance, all coming in around the $31.90 area.

AMTD stock chart daily
Click to Enlarge

Very simply, considering the still-bullish look of the financial sector as a whole and the clearly defined line in the sand (200-day moving average) on the chart of AMTD stock, active investors could use a push past $31.90 as an entry for a move toward the $34 area.

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Download Serge’s trading plan in the Essence of Swing Trading e-book here[4]. As of this writing, he did not hold a position in any of the aforementioned securities.

  1. AMTD: /stock-quotes/AMTD-stock-quote/
  2. XLF: /stock-quotes/XLF-stock-quote/
  3. Beat the Bell: https://order.investorplace.com/?sid=FQ8104
  4. Essence of Swing Trading e-book here: http://www2.marketfy.com/l/15492/2013-07-23/55sww

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