After a day of hope and euphoria, the risk-off trade came back into the spotlight on Wednesday. Much of this stemmed from reports of worrisome economic data. Perhaps the big stock charts can provide a glimmer of hope for battered and bruised investors.
First of all, U.S. retail sales declined by 8.7% during the month of March. That’s the worst single-month decline on record, and the Commerce Department has been tracking this data since 1992. Grocery stores and pharmacies apparently did well due to stockpiling. However, those were the only bright spots in a dismal month for the retail sector.
At the same time, the the Empire State Manufacturing Index fell to a historic low of -78.2. This indicator measures manufacturing activity in the New York area. To give you a reference point, it was -34.3 during the worst part of the financial crisis.
In light of this data, today’s big stock charts will concentrate on banks, the first wave of mega-cap companies to report earnings this season. Banks have been hit especially hard during the spread of the novel coronavirus.
Bank of America (BAC)
Shareholders will probably be disheartened to learn that Bank of America (NYSE:BAC) saw its first-quarter 2020 profits decline by 45%. In all likelihood, the fundamental damage will show up in the chart.
- The candlestick printed on Wednesday is an inverted hammer. That is typically understood as a bearish candle. The upper wick shows that the buyers tried to push the price up but eventually failed to do so.
- BAC stock is currently below two out of the three most commonly watched moving averages. Specifically, it’s far below the 200-day moving average, which is a long-term trend indicator. It’s also below the 50-day moving average, which indicates the medium-term trend. Now it’s struggling to stay above the short-term 20-day moving average.
- The support level to watch is $18. It’s not strong support because the price has only visited there once on the chart. Still, if BAC stock falls below that level, look out below and please always respect your stop-losses.
JPMorgan Chase (JPM)
Undoubtedly it’s been challenging for a financial institution like JPMorgan Chase (NYSE:JPM) to remain profitable during the pandemic. After all, businesses and people are trying to save money nowadays, not embark on new financial ventures. Maybe the second of our big stock charts can shed some light on the future trajectory for JPM stock.
- This one’s showing an inverted hammer candlestick for Wednesday, much like what we saw with BAC stock. It’s also on fairly heavy volume, so it appears that the bears are in charge at the moment with JPM stock.
- The stock is now far below the 200- and the 50-day moving averages, so there’s a lot of catching up to do. Interestingly, Wednesday’s candle is sitting right on top of the 20-day moving average. Traders will want to watch this line and see if JPM stock breaks below it.
- $105 was support but is now resistance. The bulls will definitely want to see the stock pierce that level with strong volume.
Wells Fargo (WFC)
Until the coronavirus curve “flattens” for a while, big banks could continue to struggle. Wells Fargo (NYSE:WFC) is one of America’s most famous banking names. Yet, even this bank has felt the impact of a jittery financial landscape. With all of that in mind, let’s hone in on the chart to see how WFC stock has been behaving.
- The most obvious feature of this chart is the massive falling wedge pattern. The downward angle on that wedge is pretty scary and isn’t a positive sign.
- With Wednesday’s price action, WFC stock fell below the 20-day moving average. That puts it below all three of the major moving averages.
- Dip buyers, please be cautious here. The bulls will want to see WFC stock overtake and hold $30 at the very least. Should it fail to do so, all bets are off at that point and the bears will be in full control.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.