While financials as a group didn’t fare too badly on Monday (November 26), Barclays PLC (BCS) the London-based financial services giant  fell by a little over 5.00% on the day.  Much of the sell-off was attributed to the sale of Barclays warrants by Quatar Holding to Goldman Sachs and Deutsche Bank, who in turn as a  hedge placed a little over 300 million Barclays shares to investors.  While Qatar Holding reiterated their strategic support for the bank, on the charts the stock left a few ominous signs that at least some further weakness in the stock price may be ahead.

As a side note, the below charts are of Barclays’ main stock listing on the London Stock Exchange but the company’s ADR trades on the NYSE under the ticker symbol of BCS and levels mentioned below will be of the ADR.

The weekly chart of Barclays PLC (BCS) shows a clear line that has served as a toggle over the past four years.  The level is roughly around the $16.50 mark and served as support from 2009 through the middle of 2011 but offered good resistance ever since.

Monday’s  gap-down came right near the $16.50 line and was further signified by the heavy volume, which of course was a direct result of the stock sale by the aforementioned banks.  Price action being what it is however, I take notice when I see such patterns.

When I look at the momentum oscillators such as the RSI (relative strength index) I note the negative divergence it has displayed since mid September, which means the stock had been climbing on an empty tank as of late.

The importance of the $16.50 area should not be understated.  While the stock eventually will try another shot at overcoming that level, in the near-term I see a potential downside target around the  late September lows at $13.65 as not entirely unreasonable. Should the stock run back up, my stop level is at last Friday’s highs at $16.30

 

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