Bank Of America, Visa, Morgan Stanley, American Express Just Carved This ‘Super-Growth’ Pattern; S&P 500, Dow Jones Futures | Stock News & Stock Market Analysis

Futures for the S&P 500 index, Dow Jones industrial average and Nasdaq 100 were little changed early Tuesday morning after the major averages rebounded strongly to close with gains of 1% or more as tariff and trade war fears eased.


Investors hoped that opposition from House Speaker Paul Ryan and other congressional Republicans could help stock, delay or modify President Trump’s steel and aluminum tariffs. Meanwhile, multiple reports late Tuesday said Trump economic adviser Gary Cohn is organizing a meeting between Trump and steel-using manufacturers later this week in a last-ditch effort to convince the president to back off.

Bank of America (BAC), Visa (V), Morgan Stanley (MS), American Express (AXP) and SVB Financial Group (SIVB) are five financials that are near buy points in early-stage flat bases.

Flat bases are sometimes described as “super-growth” patterns, especially when these shallow bases form during market pullbacks. It’s a sign that the stocks are holding up well and may perform well as the market improves.

Bank of America, Visa, Morgan Stanley, American Express and SVB Financial all are in second-stage bases. First- and second-stage bases are more likely to be big winners and less likely to fail than late-stage patterns, though it’s no guarantee.

All but American Express are showing strong relative strength lines, which track stocks’ performance vs. the S&P 500 index. Keep in mind that bank stocks tend to track the S&P 500 index over time, as their flattish RS lines indicate. But with interest rates trending higher, rate-sensitive financials may outperform.

S&P 500 index futures were fractionally below fair value. Dow Jones futures and Nasdaq 100 futures were 0.1% higher.

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Bank Of America

Bank of America rose 1.6% to 32.13 in Monday’s stock market trading, finding 50-day line support for a second straight session. The stock is 2% below a 32.77 buy point. The stock twice hit or topped that level last week, but reversed lower in both sessions, meaning the flat base was still valid as of Friday’s close. BofA’s RS line is holding at highs and has been trending gradually higher over the last six months.

Bank of America has had two straight quarters of accelerating earnings growth.


Visa rose 0.9% to 121.88 in Monday’s trading, continuing to find 50-day-line support. Visa is working on a 127.98 buy point, though an aggressive trader could look at 125.40 as an alternative, early entry.

Visa’s RS line is near a record high.

The Dow Jones component does not benefit from higher interest rates, unlike the other financials on this list, including fellow Dow Jones card giant American Express. That’s because Visa does not carry the balances on Visa-branded cards, but makes money on transaction fees.

IBD’S TAKE: Flat bases require a minimum of five weeks and typically the stock’s decline is no more than 15% from the high to low of the consolidation. Learn more about this super-growth stock pattern.

Morgan Stanley

Morgan Stanley rose 1.4% to 55.49 on Monday, working on a 58.15 buy point. Aggressive investors could eye 57.92 as an alternative buy point, but there’s little difference in the price. Morgan Stanley also has found 50-day-line support.

The RS line has made glacial gains since last April.

Morgan Stanley’s pure-play investment bank peer, Goldman Sachs (GS), retook its 50-day line Monday within its own flat base. But Goldman’s trading woes over the past year have hurt growth, and its RS line has not made much headway over the past year.

American Express

American Express climbed 1.1% to 96.66. It’s working on a 102.48 buy point. American Express needs to reclaim its 50-day moving average first.

The RS line rose from the end of May to early December but since then has lagged. However, if the stock does break out there’s a good chance that the RS line will at least clear a short-term high.

SVB Financial Group

SVB Financial rallied 1.7% to 260.12, about 1% below a 263.19 buy point. The RS line is already at a new high and has generally been rising for the past six months.

SVB owns Silicon Valley Bank and other subsidiaries. It offers commercial and private banking, wealth and asset management, and brokerage services.

Some 27 top mutual funds bought SVB Financial shares in the last three months.


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Originally posted 2019-09-19 23:10:30.


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