American Trading at TD Ameritrade (AMTD)

After breaking badly back in July, AMTD made a good effort on Friday to get back above its 50 day moving average at 18.17. Unfortunately for TD Ameritrade investors, the stock closed at 18.15 (two cents shy) and it may be poised to resume the downtrend. Take a look:


What I like most about this chart is the look of a bear flag/rising wedge pattern that has formed over the last few weeks. The stock has essentially retraced 50% of the decline from the recent high at $21.31 (which was a lower high than the 2006 peak at $23) on a bounce from a new 52 week low at $13.82. During this move from the low a few weeks ago the volume has declined and we now have what appears to be a low risk entry. I'd place an initial stop around $18.50, which should be lowered as the 50 dma falls. The bears have complete control of this stock while the 50 dma is declining and for that to stop happening the bulls need to close AMTD above that level for some period of time.

Any thoughts on TD Ameritrade's business going forward? It seems to me like the "little guy" traders must be getting cut up in this market and we aren't exactly seeing a booming stock market to attract new retail investors. If the average American does start to feel the pinch from a declining housing market you can bet they will tap into their savings which means less commissions for AMTD. The only area that I would be worried about is the possibility of a merger with E-Trade as I'm not really sure how that would effect the stock price. Otherwise I'm not a big fan of their service/product, thats why I switched to Interactive Brokers.

In other news, hooray for September, the only month to historically have negative returns on average.