4 Trade Ideas for Wells Fargo: Bonus Idea

• Posted by Greg Harmon
• on January 21st, 2025

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

Wells Fargo, $WFC, comes into the week approaching resistance. The Bollinger Bands® are open to the upside to allow a continued move, though price is outside of them at the start of the week. The RSI is rising in the bullish zone with the MACD rising and positive. There is no resistance above 77.75. Support lower is at 75 and 73 then 72 and 69.75. Short interest is low under 1%. The stock pays a dividend with an annual yield of 2.08% and has traded ex-dividend since November 8th.

The company is expected to report earnings next on April 11th. The February options chain shows the biggest open interest at the 70 strike on the put side. it is more evenly spread on the call side but biggest at the 80 strike. In the March chain open interest is biggest at the 65 then 55 and 50 strikes on the put side. It builds from 65 to a peak at 75 on the call side but is big also at 80 and 60. Finally, in the April chain open interest is biggest at the 70 put strike and much bigger and concentrated at the 82.50 call strike.

Wells Fargo, Ticker: $WFC

Trade Idea 1: Buy the stock on a move over 77.75 with a stop at 74.75.

Trade Idea 2: Buy the stock on a move over 77.75 and add a February 75/70 Put Spread ($1.00) while selling the March 82.50 Calls ($1.05).

Trade Idea 3: Buy the February/March 80 Call Calendar (93 cents) and sell the March 70 Put (73 cents).

Trade Idea 4: Buy the April 70/77.50/82.50 Call Spread Risk Reversal (87 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 with the January options expiry in the books, saw equity markets show strength after a precarious start Monday morning.

Elsewhere look for Gold to continue its assault on the all-time high while Crude Oil rises in consolidation. The US Dollar Index continues to drift higher while US Treasuries remain in a short term downtrend. The Shanghai Composite looks to continue to chop the entirety of a broad range while Emerging Markets remain in a short term downtrend.

The Volatility Index looks to remain low making the path easier for equity markets to the upside. The charts of the SPY and QQQ look strong on the longer timeframe. On the shorter timeframe both the QQQ and SPY are inching towards recovering the 6 week pullbacks. The IWM looks better than both on the shorter timeframe but has work to do on the longer chart. Use this information as you prepare for the coming week and trad’em well.

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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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