Down 6.1% YTD while peers like Goldman and Morgan Stanley are up more than 20%. Sitting around $87 against a 52-week high of $97.76. 12% off its peak, getting sold after beating earnings while every other bank in the sector rallied. Most traders look at that and move on. Here's what I see instead: a laggard in a leading sector, coiling at support, with a fundamental story the market hasn't fully priced in yet. I always say the best setups aren't the ones everyone is talking about. They're the ones sitting right next to the ones in the spotlight. Financials are the newest sector taking the rotation baton right now. When a sector starts to lead, eventually the laggards catch up. That's how rotation works. WFC is the laggard. The Story Underneath the Chart Here's what most people covering this stock are missing. The Federal Reserve lifted Wells Fargo's $1.95 trillion asset cap in June 2025, ending a seven-year restriction that was the single most significant constraint on the bank's growth. For seven years, while JPMorgan and Bank of America were growing their balance sheets freely, WFC was handcuffed. Couldn't grow loans, couldn't expand markets balances, couldn't compete at full strength. That chapter is over. Q1 2026 showed early evidence of what the unchained balance sheet can do. Markets revenue up 19% and Banking revenue up 11% year over year. And that's just the beginning. For the first time since 2020, WFC can grow total loans beyond $1 trillion, and Q1 already showed loan growth of 11% and diluted EPS growth of 15%. Now Q2 confirms it's not a one-quarter fluke. The market sold it on net interest margin concerns. I think that's short-sighted. The Pattern and the Squeeze WFC has been building a base between $85 and $90 since the post-earnings dip. Tight range. Narrowing volatility. The kind of compression that precedes a move. Analysts are flagging an inverse head and shoulders forming on the daily chart, with the neckline sitting right around $87.50. That's a classic reversal setup, and it lines up exactly with where WFC has been consolidating since earnings. Bollinger Bands contracting. TTM Squeeze loading. The spring is winding. What fires it? I think it's the market catching up to the asset cap story. Wells Fargo's ranking in M&A advising has already jumped to ninth globally, a position it couldn't have competed for under the old restrictions. That trajectory doesn't stop. Your Action Plan WFC is my financials watch all this week. The $85–$87 zone is the floor. That's where buyers have stepped in twice since the earnings dip and where the base is building. Hold that level and the squeeze fires toward $92–$95, where Baird just set their updated price target. Clear $95 on volume and the 52-week high at $97.76 comes back into the conversation fast. Lose $85 with conviction and the thesis needs a rethink. This is a patient setup. WFC isn't going to run 20% in a week. But a bank that beat earnings, in a sector that's leading the market rotation, trading at 12x earnings while peers trade at 15–17x… that's a gap that tends to close. I'll be watching the open closely. If you want to follow along in real time, join me in Daily Profits Live, where we closed 68 out of 89 trades as winners this month alone. That’s a win rate over 76%. Start getting these trades yourself. |
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