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3 Big Stock Charts for Monday: Wells Fargo, L Brands and Charles Schwab

The market fought back on Friday, with the S&P 500 gaining 1.42% on the last trading day of the week. Advanced Micro Devices (NASDAQ:AMD) and Microsoft (NASDAQ:MSFT) led the charge, up 4.1% and 3.5%, respectively. Traders were flocking back into their favorite tech names, many of which were hit exceedingly hard on Wednesday and Thursday. But that wasn’t anywhere near enough strength to undo the damage done earlier in the week. For the five-day stretch, the S&P 500 lost more than 4% of its value.

It’s volatility that leaves traders uncertain as to what the new week — and the subsequent clean slate — holds in store. None of the best-known names look stable enough to take a swing at just yet.

There are options out there though. The stock charts of Wells Fargo (NYSE:WFC), Charles Schwab (NYSE:SCHW) and L Brands (NYSE:LB) all look like they’re setting up predictable action this week … or at least soon. Here’s what’s most noteworthy about each.

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Wells Fargo (WFC)

3 Big Stock Charts for Monday: Wells Fargo, L Brands and Charles Schwab
3 Big Stock Charts for Monday: Wells Fargo, L Brands and Charles Schwab

The last several weeks have been rough on bank stocks, and Wells Fargo hasn’t been an exception to that industry-wide tide.

But, there are a couple of big clues that hint a rebound may be right around the corner.


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• The most obvious clue that a low may have just been logged is readily evident on the weekly chart. This past week’s low was defined by a revisit of the floor that connects the past two major lows.

• The shape of Friday’s bar is also telling, in how it relates to Thursday. Friday was a doji bar, with the open and close not only near the same price, but well with the range defined by Thursday’s open and close. Yet, Friday’s high-to-low range extends above and below Thursday’s high-to-low range. This sort of arrangement is often seen at pivot points.

• While the stage may be set, these are the kinds of clues that require a confirming move. A close above the blue 20-day moving average line at $53.43 would be a huge hint to that end.

Charles Schwab (SCHW)

Charles Schwab (SCHW)
Charles Schwab (SCHW)

By the time all was said and done, Charles Schwab shares recovered a respectable amount of last week’s potential loss. But even with Friday’s snap-back, SCHW is sitting right on the fence. Worse, it’s at least weakened its last-ditch support lines. One or two more bad days — or a renewal of the marketwide weakness — could push Schwab over the edge of the cliff.


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• There are two key lines in the sand, both of which are plotted on both stock charts. There’s horizontal support around $49.10, marked with a yellow dashed line. And, there’s also a falling support line plotted as a light blue dashed line.

• Although vulnerable, this is a vulnerability that could take a few days to become fully realized. That is to say, we might see the bulls push back a bit from last week’s steep selling. It’s the next move below $49.01, whenever it happens, that should be concerning.

L Brands (LB)

L Brands (LB)
L Brands (LB)

Last but not least, though the rhetoric has been decidedly bearish for the past few days, not every name is fighting an uphill battle. Some names, in fact, are knocking on the door of what could be a compelling bullish wave.

L Brands, the parent company of Victoria’s Secret and Bath & Body Works, is one of those names. While not over a key hump just yet, the bulls are testing those waters.


Click to Enlarge

• Though it didn’t move above it, LB is within striking distance of the gray 100-day moving average line that proved itself a technical ceiling just a few weeks ago. But, the stock still managed to make a gain last week while most other stocks were being routed.

• The volume behind the daily gains seen since September has been above average more often than not, suggesting there are many would-be buyers waiting in the wings.

• The white 200-day moving average line at $37.52 is the next likely technical ceiling, but beyond that, there’s a bearish gap from March that’s beckoning LB back to the $48.50 mark. That’s plotted with a green, dashed line.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.

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