Below we have included the downside targets for Wells Fargo (WFC) using Dow Theory and Edson Gould’s Speed Resistance Lines.
Based on the Dow Theory perspective, Wells Fargo looks to decline at least to the $39.91 level and looks to hit the $36 level shortly there after. According to the fair value level of $31.66, investor should start doing their fundamental research on the stock as the value component will start to come into play.
Based on Edson Gould’s Speed Resistance Lines (SRL), Wells Fargo is testing the conservative downside target of $39.12. Given what appears to be the early stages of negative news for the stock, we believe that WFC will decline to the mid-range downside target of $28.96. It is at this point ($28.96) that investors should start their homework on WFC for consideration to buy.
Of the two, the most ideal downside assessment of WFC is the SRL. However, if you’re attempting to actually buy the stock in stages as the company declines in price, Dow Theory afford more opportunities. A three stage purchase plan based on Dow Theory should be 50%, 25% and 25% for the $31.66, $23.40 and $15.15 price points.