The recent development in Wells Fargo & Company (NYSE:WFC) stock have made investors to juggle around with their spending. Many experts agree that the truth about a stock is best reflected in the way it moves on the chart. For this stock, the chart has a lot to say about future performance.How has the stock performed recently?
Wells Fargo & Company (NYSE:WFC) has been trading in a bullish manner, based on the relative positions of the stock’s 20 and 200 day moving averages. In the last month, the price of WFC has decreased -9.67%. Shares are now up over the past year, outperforming the broad market by -100% and underperformed a peer group of similar companies by -131%. After the latest session, which saw the stock close at a price of $56.50, WFC sits below its 52-week high.Momentum indicators
Of course, these surface-level price movements don’t tell us much about the direction that WFC may be headed in the future. Fortunately, there is way to use the speed and magnitude of these price changes to predict future performance, thanks to what are known as momentum indicators. As momentum slows, it might be a sign that a support or resistance level has been reached, and that a trend is about to reverse. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for WFC is 35.53%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 9.33%, tells a different story, and suggests that WFC currently trades in oversold territory.What do the trading volumes reveal?
Volume patterns are useful for gauging the level of conviction behind price changes, and can be used to make predictions about future price movements. A sudden increase in a stock’s activity can be a sign that investors are trading in anticipation of a catalyst, or that investors feel very strongly in one way or the other about the future direction of a stock. Wells Fargo & Company (WFC) average trading volume of 29,387,266 during the past month is 53.58% above its average volume over the past year, indicating that investors have been more active than usual in the stock in recent times.
WFC is currently undervalued by -11.84% relative to the average 1-year price target of $64.09 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.80, which implies that analysts are generally neutral in their outlook for WFC over the next year.How risky is the stock?
When predicting the future performance for a stock, it’s also important to take into account risk. To do this, analysts often use a stock’s beta, which measures the stock’s volatility relative to the overall market.
Wells Fargo & Company (NYSE:WFC) has a beta of 1.13, compared to a beta of 1 for the market, which implies that the stock’s price movements are more extreme than the market as a whole. WFC therefore has an above average level of market risk. During the past couple of weeks, WFC average daily volatility was 43.92%, which is -19.55 percentage points higher than the average volatility over the past 100 days.