Diversified bank Capital one Financial Corp (COF), unlike the broader market is trading in negative territory year to date. Two of its closer competitors however, Visa Inc (V), and Mastercard Inc (MA) are all posting solid gains for the year and recently staged additional near-term breakouts. While the under-performance of Capital one Financial Corp (COF) may or may not be justifiable from a fundamental standpoint, the fact is that the stock is currently forming a strong pattern which may well lead traders to chase it higher for a catchup play to its competitors.
After coming nicely off an early March bottom, the stock spent the past month shuffling sideways, frustrating those looking for sympathy from traders enjoying price gains in its competitors. The price action over the past two days however has acted noticeably more constructive, so much so that a breakout past recent resistance now seems very feasible.
The resistance point in question is near $55.20, on a daily closing basis, which serves as the top-end of the recent sideways trading range. A solid break above there should allow the stock enough breathing room up to a confluence of the 100 and 200 day simple moving averages and possibly enough up to the February highs near $58. Above $58 the stock would start working into a nice down/gap from early January, read ‘air’.
While a meaningful down-draft in the broader indices would likely also pressure Capital one Financial Corp (COF), in the meantime the technical setup remains ripe for a try higher.