When we reviewed Wells Fargo & Co. (WFC) near the end of February we wrote that, "WFC may indeed put their problems behind in the months ahead but for me the charts need more work. A rally above $62 could restart the uptrend but a close below $54 are likely to embolden the bears."
With Friday's upside gap on WFC after Thursday's stress test results a fresh look at the charts is a good idea but let's review what actually happened since February. WFC was unable to rally to $62 let alone over $62. Prices slumped to near $50 in March and April before firming back to the underside of the 200-day moving average line. Let's see if the chart picture is stronger now.
In the updated daily bar chart of WFC, below, we can see that prices have gapped higher above the 50-day moving average line and are trading above the slightly rising 200-day moving average line. Over the past 12 months we have seen WFC gap lower a number of times but this is the first upside gap. The volume pattern for May and June does not show an increase in activity so there does not seem to be much in the way of anticipatory buying.
The daily On-Balance-Volume (OBV) line shows some improvement in May and then an uneven pattern in June. There was some increase in aggressive buying but not a lot. The Moving Average Convergence Divergence (MACD) oscillator corrected down to the zero line and it is now likely to turn back up.
In this weekly bar chart of WFC, below, we still have a mostly bearish setup. Prices could make a weekly close above the 40-week moving average line. The weekly OBV line was pointed down and the weekly MACD oscillator was on the fence well below the zero line.
In this Point and Figure chart of WFC, below, we can see a triple top breakout at $56.63 and a potential upside price target of near $65.
Bottom line: WFC is seeing some intraday profit-taking around $57 and it is possible that prices do not close above the 200-day line Friday. WFC could well pull back and fill the price gap in the days ahead. I need more convincing that WFC can rally in a sustained fashion.