While the broader U.S. indices continue to push higher and drop volatility, the all-important financial sector has also wiggled itself into a more constructive spot after looking like it could break down as recent as three weeks ago.
In that vein shares of PNC Financial Services Group Inc (NYSE:PNC) also seem to be ready to break past technical resistance and to fresh all-time highs. Active investors would do well to watch PNC stock closely.
On Jan. 16, PNC Financial reported better-than-expected fourth quarter earnings of $1.84 per share on revenues of $3.95 billion. PNC stock rallied as a result, bouncing shares off their year-to-date lows.
In the bigger picture, it is important to keep in mind that the broader market cannot rally meaningfully without the participation of the financial sector, and likewise the broader market cannot fall hard if banking stocks are holding up.
PNC Stock Charts
Looking at the multiyear weekly picture of PNC stock below, we see that an important and bullish move took place in January 2014 that broke the stock past a long-term horizontal line of resistance around the $77 area. Like any technically sound asset that stages bigger-picture breakout moves, PNC stock eventually retested this breakout point, only to quickly and sharply reverse back higher along with the broader market.
This classic type of price action is constructive and speaks to a continued ascent in shares of PNC Financial.
Zooming in on the daily chart, we see that since the V-shaped reversal and retest of the long-term resistance (now support) line from last October, PNC stock made another important higher low in January following the most recent earnings report. The stock then swiftly pushed back above its medium-term moving averages (50-, 100- and 200-day in yellow, blue and red, respectively) and over the past couple of weeks began consolidating/coiling up below the all-time highs set last December.
From here, if the broader market truly wants to push higher still, then this recent strength in financial stocks has to continue too, which in the case of PNC stock would mean a next leg higher could pop up and push the stock to all-time highs.
The sound technical structure of PNC stock, combined with a 2% dividend yield, could see this stock release into the high $90s and possibly toward the magnet at the $100 mark if a further risk-on move in stocks unfolds into the spring.
For active investors, a move clearing the $93.50 area could trigger a trade.
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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.
