Trading Idea - People's United Financial Breaking Down?

Published on Thursday, 26 January 2012 21:44 Written by Danny Miller

New York, January 26th (TradersHuddle.com) - Shares of People's United Financial Inc. (NASDAQ:PBCT) closed the trading session at $12.63 below calculated support at $12.75 breaking the stock technically, raising concerns by investors, as the move might trigger more selling.

Peoples United Financial Inc. (NASDAQ:PBCT) is a bank holding company. The Company, through its banking subsidiary, offers a full range of financial services to individual, corporate, and municipal customers primarily in Connecticut. The Bank issues credit cards and provides brokerage and investment planning, asset management, equipment leasing, and insurance services.

People's stock was trading in a well defined range with support at $12.75 and resistance at $13.79; given that this range was broken traders will be closely monitoring the stock's price action for clues of direction.

From a technical perspective it can be expected that previous support becomes resistance, as the new range gets defined, however, given that People's stock is still near the broken support, traders will be focusing on $12.75 to see if the stock can bounce back and return to its previous range.

Traders wanting to establish a short position in People's United Financial can do so if the stock breaks the intraday low, or if the stock bounces back and selling materializes again at previous support of $12.75. For traders wanting to establish a long position, wait for price action to take the stock back to calculated support, which will provide a best entry point to build the position.