3 Bank Stocks With Ugly Downtrends

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Fourth-quarter earnings season is officially underway, and the headlines this week have been dominated by the results from the financial stocks that have confessed their numbers to Wall Street.

BankSo far, the results have not been anything to write home about.

This week, the Profit Scanner, powered by Recognia, identified three financial stocks that have broken down from critical support levels and entered new potential downtrends as a result of their poor earnings results.

Here are three financial stocks to rid yourself of after earnings:

JPMorgan Chase & Co. (JPM)

JPMorgan Chase & Co. (JPM), which is the largest U.S. bank in terms of assets, reported its fourth-quarter earnings on Jan. 14. JPMorgan Chase announced that it had earned $1.19 per share on revenue of $22.51 billion. The numbers came in against analyst estimates for $1.31 per share on revenue of $23.64 billion.

The earnings miss caused JPM stock to cross below its 200-day moving average, which generated a long-term bearish signal from Profit Scanner.

20150115 SS JPM

 

As you can see in the chart above, the stock had bounced off of its 200-day moving average previously on several occasions. However, the gap down dropped JPM stock well below that technical support level, and it will now try to find support in the $54 area, which is where it found support throughout 2014.

Wells Fargo & Co (WFC)

Profit Scanner also identified a bearish signal on shares of Wells Fargo & Co (WFC), as it too crossed below its 200-day moving average. Wells Fargo reported its earnings on Jan. 14 as well, and WFC stock fell 1.2% on the news.

WFC reported earnings per share of $1.02 on revenue of $21.44 billion, versus expectations for a reading of $1.06 per share on revenue of $21.4 billion. As a result, WFC stock dropped below its 200-day moving average support level.

20150115 SS WFC

Additionally, Profit Scanner previously identified several bearish signals leading up the report. On Jan. 7, it recognized that Wells Fargo stock had endured a bearish triple moving average crossover — a short-term bearish signal — that occurred when the 4-day moving average bar crossed below the 9-day bar, which in turn crossed below the 18-day bar.

Then, on Jan. 9, Profit Scanner detected that WFC stock had broken below its 21-week moving average, which it classified as an intermediate-term bearish signal.

Bank of America Corp (BAC)

Finally, Bank of America Corp (BAC) reported its fourth-quarter earnings ahead of the open this morning, and the results caused a sharp 4.5% selloff in BAC stock. Bank of America reported that it earned 25 cents per share on revenue of $19 billion, which were both below Wall Street’s expectations.

On Jan. 12, Profit Scanner alerted users to a Diamond Top pattern that had formed in BAC stock.

According to Profit Scanner,the pattern began during an uptrend in which Bank of America stock was making higher highs and lower lows in a broadening pattern. Then the trading range gradually narrows after the highs peak and the lows start trending upward. When the price broke downward out of the diamonds boundary lines, it marked a significant reversal to a new downtrend.

20150115 SS BAC

The breakdown from the Diamond Top pattern also caused BAC stock to gap lower and down through its 200-day moving average, creating a long-term bearish signal. Bank of America is likely to continue its fall to its previous support level around $15.50, which is the level it bounced off of during the broad market selloff in October of 2014.

Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.


Article printed from InvestorPlace Media, https://investorplace.com/2015/01/financial-jpmorgan-chase-jpm-wells-fargo-wfc-bank-of-america-bac/.

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