4 Trade Ideas for Wells Fargo: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

Wells Fargo, $WFC, comes into the week attempting to reverse higher. It failed to hold Friday as it moved into the gap above but did hold the gap up from the morning. The RSI is pushing back toward the bullish zone with the MACD crossed up but still negative. There is resistance at 44.35 and a gap to fill to 45.26 then at 46.25 and 47.25 before 49.15. Support lower comes at 42.50 and 41.45. Short interest is low under 1%. The stock pays a dividend with an annual yield of 2.78% and has traded ex-dividend since August 4. The company just reported earnings and is expected to report next on January 18, 2023.

The October options chain shows the biggest open interest at the 42.50 and then 45 strikes on the put side, and at the 45 strike on the call side. The November chain shows open interest spread from 45 to 25, biggest at 35 on the put side and more focused from 40 to 52.50, biggest at 45, on the call side. December options are spread from 35 to 45 on the put side and bigger at 45 and 47.50 on the call side. Finally the January 2023 chain has open interest spread from 20 to 55 on the put side, biggest at 35 and 40. The call side is biggest at 50.

Wells Fargo, Ticker: $WFC

Trade Idea 1: Buy the stock on a move over 44.35 with a stop at 42.50.

Trade Idea 2: Buy the stock on a move over 44.35 and add a November 42.50/40 Put Spread (88 cents) while selling the December 50 Call (53 cents).

Trade Idea 3: Buy the December/January 47.50 Call Calendar (78 cents) and sell the October 42 Puts (41 cents).

Trade Idea 4: Buy the January 35/45/50 Call Spread Risk Reversals (84 cents).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which heading into October options expiration and the height of earnings season, saw equity markets continue to look better to the downside.

Elsewhere look for Gold to continue its move lower while Crude Oil reverses the lower killing the short term trend higher. The US Dollar Index continues the trend to the upside while US Treasuries continue their downtrend. The Shanghai Composite has morphed to a short term trend higher in broad consolidation while Emerging Markets continue the long trend lower.

The Volatility Index looks to remain elevated making the path easier for equity markets to the downside. Their charts look on both timeframes. On the longer timeframe both the IWM and SPY building flags, look a bit stronger than the QQQ which continues to drive lower. On the shorter timeframe the charts continue to move in tandem. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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