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Technical Watchlist: Meritor, Banc of California, Fate Therapeutics

Posted on Wednesday, November 27th, 2019 by Sam Quirke

With the S&P 500 trading around all-time highs, investors might be excused for being happy to simply be ‘long and strong’ indices as we go into the final stretch of 2019. However, opportunities for hard and fast moves in individual stocks abound as evidenced by their technical setups. 

Here are 3 stocks with interesting charts that are worth having on your watchlist over the next few weeks.

Meritor (NYSE: MTOR)

Shares of Meritor (NYSE: MTOR), an auto parts supplier to the military, have been on a burner since early October. They’re up over 50% in the past six weeks and are hanging out right around short term resistance at $25.

The stock was turned back from this level in April, May, July, and August and are back knocking on the door again. Despite the recent run, they’re not looking too overcooked, considering a 35% pullback after the last reached this level released a bit of pressure. While this selloff came on the back of an earnings miss, there was a strong bounce off support at $16 to start the current run.

They missed analyst expectations again in their Q4 earnings two weeks ago and gapped down 8% on the next day’s open. However, in another sign of how attractive the company is to investors, shares were immediately snapped up off those levels and are now well above their pre-earnings high.

A clean break above $25 sets shares up for a 20% move towards the $30 level which they last hit in 2017.

Technical Watchlist: Meritor, Banc of California, Fate Therapeutics

Banc of California (NYSE: BANC)

There’s a very attractive tightening wedge or pennant forming in shares of Banc of California (NYSE: BANC) this year so far. After a weak close to 2018 that wasn’t unique to BANC by any means, shares have been setting higher lows and lower highs. As the trading range has tightened, this action is setting them up for a showdown around the $14-15 dollar level. Case in point, their 50-day moving average, and 200-day moving average prices are only $0.04 apart and have effectively been parallel for almost 3 months.

To the upside, $20 makes sense a rough target given shares constantly ebbed and flowed around it before 2018’s selloff.

A breakout to the downside makes $12 the natural destination and this is where shares have found buyers multiple times in recent years. 

The company posted a decent miss on expectations in the latest earnings report, released at the end of October. However, shares were quick to catch a bid are back trading at pre-release levels which stacks the odds in favor of a breakout to the upside.

Either way, shares can’t trade in a tightening range forever and BANC’s hand will be forced in the coming weeks.

Technical Watchlist: Meritor, Banc of California, Fate Therapeutics

Fate Therapeutics (NASDAQ: FATE)

They say that stocks take the stairs up and the escalator down and that’s exactly what’s happened to shares of Fate Therapeutics (NASDAQ: FATE) over the past two years. A 400% run from the end of 2017 ended with a 40% pullback in 4 months and that’s where the stock finds itself going into the holiday season.

While it might sound disorderly, the weekly chart shows that there’s solid a solid structure in the works and shares are approaching an inflection point.

Biotech companies can be fickle beasts and investors can oftentimes find themselves at the whim of FDA inspectors, regulators and the company themselves. For example, stock offerings rife among biotechs as funding can quickly dry up and investors in FATE were hit with dilution from such an event in September. Negative results from a trial can also hit the newswire at any time and investors should be cognizant of these risks.

However, the volatile nature also means there tend to be more technically promising setups than in non-biotech stocks. That’s exactly how investors should approach FATE in the short term. Trade the technicals and beware of the fundamental risks that are outside the company’s control.

Technical Watchlist: Meritor, Banc of California, Fate Therapeutics

Companies Mentioned in This Article

CompanyCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Fate Therapeutics (FATE)$18.79flatN/A-15.79Buy$25.19
Banc of California (BANC)$16.30flat1.47%33.27Hold$15.50
Meritor (MTOR)$24.34flatN/A6.37Hold$23.49

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