Charles Schwab Opportunity
Updated
Charles Schwab SCWH
Earnings info will follow in comments:
Company Market Cap: $97.8 billion
Share Price: $53.72
Dividend: $1.00 dps – Dividend per share ($0.25 per quarter)
Dividend yield: 1.94% (Annual dps divided by current share price, expressed as a percentage)
Why this Trade?
o Contrarian trade – news is so negative its hard to not to feel interested
o Price 50% down from highs in Feb 2022
o Ascending triangle base re-test on-going
o Defined risk level/stop loss makes it an easy set up
o Long term diagonal support line provides secondary support
o RSI Oversold historic returns inform us of a current opportunity and potential future opportunities.
Concerns/Risks:
o Schwab is not a Global Systemically Important Bank (G-SIB)
o The 200 week SMA has been lost
o Rumours of Bankruptcy
Company Summary
o Charles Schwab is the 17th largest bank in the world with a market cap of $94.4 billion.
o Charles Schwab is primarily a wealth management and investment bank which stands out among the investment broker realm for its customer service, $0 trade commissions and large selection of mutual funds. From its origination the company has been all about making investing accessible to everyone.
o In line with this vision, Charles Schwab acquired rival firm TD Ameritrade three years ago. TD Ameritrade now provides investing and trading services for 11 million client accounts that total more than $1 trillion in assets, and custodial services for more than 6,000 independent registered investment advisors. Many Americans actively trade on TD or manage their own ROTH IRA’s through the platform, offering them tax benefits/advice and very flexible options for managing their own retirement funds. TD's Roth IRA has zero annual account fees or management fees.
The Chart
o You can see a potential Long Term Ascending Triangle playing out.
o There is an underside diagonal support line.
o The beauty of this trade is the following:
- A defined stop loss level at $45.39
- A potential 85% upside to – 12% downside (Adjust to suit your tolerance).
- A bounce of the top of the ascending triangle is promising.
o Any time we have been this oversold on the RSI we have made a significant upside move (green circles on the chart).
o The average performance after the green oversold RSI levels is an 82% price increase within a 12 months.
o If there is one thing we can take away from this chart it is that if we reach down into RSI oversold levels again this would be a great opportunity.
o Regardless I am proposing the trade based off the pattern and recent oversold RSI. Since this recent oversold level we have had an approximate 50% increase in price and a 27% retraction/decline back down to the ascending triangle base.
o For those of you who want to lower your risk you can raise the stop loss to a 5% decline ($48.00) or you can wait until over sold levels present themselves again.
Important to note that Charles Schwab is not a Global Systemically Important Banks (G-SIB) like Citibank and the likes. This makes this a higher risk trade, especially if we are looking long term over a 52 week period. Regardless, it is a well-established bank providing some of the leading brokerage services to the US public including management of ROTH IRA’s, the cornerstone of most Americans retirement planning. One could argue, its systemically important without being a member of the G-SIB.
As always, stay nimble in this market, do not enter a trade without a stop loss at a risk level you can tolerate. Same goes with position size. With this stock 50% down from highs way back in Feb 2022 this maybe an opportunity to claw onto this long term rising trend near it lower diagonal support line.
PUKA
Earnings info will follow in comments:
Company Market Cap: $97.8 billion
Share Price: $53.72
Dividend: $1.00 dps – Dividend per share ($0.25 per quarter)
Dividend yield: 1.94% (Annual dps divided by current share price, expressed as a percentage)
Why this Trade?
o Contrarian trade – news is so negative its hard to not to feel interested
o Price 50% down from highs in Feb 2022
o Ascending triangle base re-test on-going
o Defined risk level/stop loss makes it an easy set up
o Long term diagonal support line provides secondary support
o RSI Oversold historic returns inform us of a current opportunity and potential future opportunities.
Concerns/Risks:
o Schwab is not a Global Systemically Important Bank (G-SIB)
o The 200 week SMA has been lost
o Rumours of Bankruptcy
Company Summary
o Charles Schwab is the 17th largest bank in the world with a market cap of $94.4 billion.
o Charles Schwab is primarily a wealth management and investment bank which stands out among the investment broker realm for its customer service, $0 trade commissions and large selection of mutual funds. From its origination the company has been all about making investing accessible to everyone.
o In line with this vision, Charles Schwab acquired rival firm TD Ameritrade three years ago. TD Ameritrade now provides investing and trading services for 11 million client accounts that total more than $1 trillion in assets, and custodial services for more than 6,000 independent registered investment advisors. Many Americans actively trade on TD or manage their own ROTH IRA’s through the platform, offering them tax benefits/advice and very flexible options for managing their own retirement funds. TD's Roth IRA has zero annual account fees or management fees.
The Chart
o You can see a potential Long Term Ascending Triangle playing out.
o There is an underside diagonal support line.
o The beauty of this trade is the following:
- A defined stop loss level at $45.39
- A potential 85% upside to – 12% downside (Adjust to suit your tolerance).
- A bounce of the top of the ascending triangle is promising.
o Any time we have been this oversold on the RSI we have made a significant upside move (green circles on the chart).
o The average performance after the green oversold RSI levels is an 82% price increase within a 12 months.
o If there is one thing we can take away from this chart it is that if we reach down into RSI oversold levels again this would be a great opportunity.
o Regardless I am proposing the trade based off the pattern and recent oversold RSI. Since this recent oversold level we have had an approximate 50% increase in price and a 27% retraction/decline back down to the ascending triangle base.
o For those of you who want to lower your risk you can raise the stop loss to a 5% decline ($48.00) or you can wait until over sold levels present themselves again.
Important to note that Charles Schwab is not a Global Systemically Important Banks (G-SIB) like Citibank and the likes. This makes this a higher risk trade, especially if we are looking long term over a 52 week period. Regardless, it is a well-established bank providing some of the leading brokerage services to the US public including management of ROTH IRA’s, the cornerstone of most Americans retirement planning. One could argue, its systemically important without being a member of the G-SIB.
As always, stay nimble in this market, do not enter a trade without a stop loss at a risk level you can tolerate. Same goes with position size. With this stock 50% down from highs way back in Feb 2022 this maybe an opportunity to claw onto this long term rising trend near it lower diagonal support line.
PUKA
Note
EPS: Reported 0.77 / Expected: 0.749 Revenue: Reported $4.606 bln / Expected: $4.615 bln
Earnings Main Summary:
- Profits reduced 30% YOY, the biggest drop since GFC 2008
- Bank deposits down 30%
- Share price down 48% and bounced off $50 level on 6th Oct
- Share price now at $53.75
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