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Capital One Financial Corp - (COF) - September 22, 2023

In what could potentially be seen as a sign of growing concern among investors about the health of consumer spending, the relative strength of credit card companies has eroded in recent weeks. Within the SIA S&P 100 Index Report, Capital One Financial (COF), for example, has been out of the green zone since March, peaked near the top of the yellow zone back in July, slipped back into the Red Unfavored Zone earlier this month. COF continues to drop down the rankings, finishing yesterday in 66th position, down 3 spots on the day and down 18 places in the last month.

Financials in general have been struggling on a relative strength basis with the exception of the Insurance sector where Berkshire Hathaway (BRK.B) remains in the Green Favored Zone, while American International Group (AIG) and MetLife (MET) have been climbing within the Yellow Neutral Zone. In Canada, Power Corp (POW.TO) is in the Green Favored Zone of the SIA S&P/TSX 60 Index Report. For about a year now, Capital One Financial (COF) shares have been range bound, trading back and forth between $85.00 and $120.00. It remains unclear if this is a period of base building following a 2022 downtrend, or an extended pause within a larger retreat.

In recent weeks, since a spring rally faltered short of $120.00 resistance earlier this summer, the shares have been under distribution with this week’s breakdown below $100.00 confirming that a downswing is underway. Next downside support appears in the $85.00-$90.00 area near previous lows with initial resistance possible near $105.00 or $110.00.

Compared with some other large cap US stocks, Capital One Financial (COF) has not really recovered from the 2022 bear market. The shares peaked in the summer of 2021, and despite a couple of rally attempts over the last year, it continues to set lower lows in pullbacks.

The most recent attempt by the bulls to get something going faltered back in August, and the shares have turned downward once again in recent weeks, completing two bearish Double Bottom breakdowns and a Bearish Catapult, indicating distribution has resumed again.

Capital One has dropped back under $100.00, and next potential support appears in the $87.95 to $84.55 zone where several previous lows plus horizontal and vertical counts cluster. Initial rebound resistance appears near $103.20 based on a 3-box reversal.

With a perfect bearish SMAX score of 0, COF is exhibiting weakness across the asset classes.

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