Wells Fargo (WFC) sunk 7% in after hours trading on Friday and premarket trading on Monday, after the Federal Reserve issued a cease and desist order.
In response to what it called “consumer abuses and compliance breakdowns,” the bank is now restricted from growing larger than its total assets as measured on December 31, 2017.
Fed Orders Wells Fargo to Cease and Desist
Issued after the market close on Friday, this represents one of Janet Yellen’s last significant actions as Chair of the Federal Reserve before she stepped down the following day.
However, it was not clear why she did not take this particular action sooner. The order will be in effect until the company convinces regulators that they have made “sufficient improvements.”
Based on the WFC’s market cycles, our analysis suggests a near-term decline into late March, with a target around $56. Note that the market cycles on the chart below are designated by the black semicircles at the bottom of the chart.
WFC Stock Chart (Weekly Bars)
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