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Shares of financial stocks last week rallied nicely off their intraweek lows … along with the broader stock market lift, that is. As we will see on the charts below, bullish reversals have taken place on many daily charts, including on that of BlackRock, Inc. (NYSE: BLK ). A long-side swing trade in BLK stock now is setting up against well-defined technical support.
Before looking at the below charts, allow me to reiterate that this current stock market choppiness is further increasing correlation among stocks, particularly on oversold bounces and overbought reversals. As such, the below trade idea should only be taken with a close eye on the broader stock market behavior.
BLK Stock Charts
Click to Enlarge
Moving averages legend: red - 200 week, blue - 100 week, yellow - 50 week
On the multiyear weekly chart, note that coming into 2018 BLK stock went into vertical overshooting mode … much like the broader market did. Since then it has been a choppy going for the stock but it has found a clearly defined area of technical support for bounce trades.
I expect this stock to continue trading in a choppy fashion and possibly bounce to another lower high, just as it did in March. Note that the stock's bigger-picture momentum as represented by the MACD oscillator at the bottom of the chart is still not oversold enough to call for any major new bottom buying opportunity through a multi-month/quarter lens.
In other words, this stock in my eye is best to be 'traded' with select high probability opportunities.
Click to Enlarge
Moving averages legend: red - 200 day, blue - 100 day, yellow - 50 day
On the daily chart, we see that since topping out in January, BLK stock has routinely found support at a simple horizontal area just around the $500 mark. This area of support was once again tested last Thursday and confirmed with what I refer to as "follow-through" buying day on Friday.
As a result I now see a next upside target in the $538-$540. More importantly however as always is the very well defined support area around the $500 area. Any hold below this line, particularly on a daily closing basis, would be a last-resort stop-loss signal.
Check out Serge's Daily Market Outlook for May 7.
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