Wednesday morning kicked off with news that Wells Fargo (NYSE: WFC) saw third-quarter earnings rise to $3.24 billion (56 cents per share) from $1.64 billion (49 cents per share) last year. The results handily trounced the consensus estimate of 37 cents per share.
Wells Fargo also reported revenue of $22.47 billion , which was better than both a year ago and the consensus estimate. The company stated that net charge-offs for the quarter came in at $5.1 billion (2.5% of average loans), compared to $4.4 billion (2.11% of average loans) in the second quarter. The bank did note that it expects credit losses to continue increasing, but at a slower pace thanks to a slowing of the pace of deterioration.
Shares of the bank were slightly lower ahead of the open, but it appears that there should be some support that could stop the slide. Shares of WFC are positioned north of their 10- and 20-week moving averages, which have helped propel the stock higher since April. In addition, the stock is atop its 10-, 20-, and 50-month moving averages. Any of these trendlines could act as support if needed, with the 50-month in a position to do so first.
The stock is going to need the support going forward, as the $32 level looms overhead. This level has acted as resistance in the past, turning the shares away on several occasions from 2004 through 2005. In order to advance further, this resistance will have to fall by the wayside, which doesn't appear to be an easy scenario to play out.
There is some hope, as WFC's 10-month moving average is on a trajectory that includes a bullish cross of its 20-month counterpart. Should this technical formation come to fruition, it could signal a run higher for WFC.
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