This Could Be a Low-Risk Buying Opportunity on Wells Fargo

The shares are quickly recovering after a decline in the first half of June.
Stocks quotes in this article: WFC

During Thursday's Mad Money program Jim Cramer noted that Wells Fargo (WFC) could be the biggest winner after it passes the latest round of government stress tests. He told viewers to view weakness as a buying opportunity because the rally may have only just begun.

Let's check out the charts.

In this daily bar chart of WFC, below, we can see that the shares are quickly recovering after a decline in the first half of June. Prices are back above the rising 50-day moving average line. The slower-to-react 200-day moving average line intersects around $34.

The On-Balance-Volume (OBV) line has maintained a strong uptrend from late October and confirms and supports the gains in the stock. The Moving Average Convergence Divergence (MACD) oscillator is ready to cross to the upside for a cover shorts buy signal.

 
In the weekly Japanese candlestick chart of WFC, below, we can see a generally positive-looking picture. Prices are in an uptrend above the rising 40-week moving average line.
 
The weekly OBV line has been rising since June of 2020. The MACD oscillator is just crossing to the downside for a take profit sell signal.
 
 
In this daily Point and Figure chart of WFC, below, we can see a potential upside price target in the $60 area.
 
 
Bottom-line strategy: It looks like we have a low-risk buying opportunity on WFC. Traders could go long WFC here and risk a close below the recent low. Our initial price target is $60.

(WFC is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells WFC? Learn more now.)

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are prohibited from trading individual securities.

TAGS: Investing | Stocks | Technical Analysis | Banking | Financial Services | Mad Money

More from Stocks

Russell Rebalancing Caps a Solid Week for Bulls

James "Rev Shark" DePorre

The issue now is whether there will be some 'unwinding' of that action next week.

AST SpaceMobile and Stable Road Are 2 High Priority Space Names to Watch

Timothy Collins

I'll be taking a small stock position in ASTS over the weekend on the off chance we gap higher Monday.

3 High-Yield Telecom Stocks for Reliable Income

Bob Ciura

Thes top-ranked names have high yields and safe dividends.

Verizon Looks Overdue for an Upside Breakout

Bruce Kamich

Let's check out the charts and indicators.

A Little Rest Friday Is Exactly What's Needed to Keep the Indices Running Higher

James "Rev Shark" DePorre

This is a nice-looking uptrend right now, and I see no reason to start anticipating major problems.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight