On the heels of disappointing earnings reports by several big American banks this week, financial stocks have taken a beating. A quick look at some charts reveals a disturbing trend in several big-name stocks.
Bank of America Corp BAC 1.18%
Bank of America’s earnings report this week was a flop, as the company missed revenue expectations by $2 billion.
After finishing 2014 essentially at 52-week highs, Bank of America’s stock has taken a dive in early 2015.
The stock broke down out of the upward channel it had been trading inside since the end of April 2014. The stock has even dropped below the low of its previous dip back in October.
Related Link: The Truth Behind Banking’s ‘Big Four’ In 3 Charts
It appears the next potential technical support is around $14.75, a level at which the stock found support in early August.
JPMorgan Chase & Co JPM 1.71%
One doesn’t have to be a technical analyst to recognize a breakdown in JP Morgan’s chart that is very similar to the one in Bank of America’s chart.
JP Morgan stock has also been trading inside of an ascending channel since April of 2014, and it broke out of that channel to the downside this week on disappointing earnings.
Shareholders are hoping that the $74.00 level that served as support in October will hold this time.
Citigroup Inc C 0.8%
Citigroup stock broke down this week after a lackluster earnings report and crashed through the support line of the upward-sloping channel it had been trading inside since April 2014.
Shareholders are hoping the stock finds support at the $46.00 level.
That level was tested and held several times in early 2014.
Outlook
There’s no way to know for sure whether these technical breakdowns are temporary, or a sign of more trouble ahead.
However, one thing is certain: 2015 is off to a rough start for these three big banks.
Read this article and all my other articles for free on Benzinga by clicking here
Want to learn more about the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
