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Hi Lou,

I am picking up positive vibes on WFC and wondered if I could ask for your opinion.

Thanks,

John



Hey John,

Thanks for the assignment! Warren Buffett owns a nice piece of Wells Fargo & Co. so you are following in the footsteps of a giant. Your vibe on the potential for the shares could be driven by rumours of increasing dividends. There is conjecture that the company has the room to goose the cash distributed to owners over the next few years. Nothing lifts a stock like a boost in its dividend.

The charts will provide further guidance to help you with see if your vibe is supported by technical indicators.

The three-year chart depicts a stock that has been range bound since late 2009 with support at $23.00 and resistance at $34.00. The downtrend that started in February, 2011 as the shares hit resistance has been broken and have now caught a bounce off support.

The MACD and RSI on the six-month chart both signalled the late November move off of $23.25 to the high of $27.25 December 07, 2011. A 17 per cent return in two weeks is a nice little something to enjoy during the Christmas Season!

Currently the stock has met resistance along the 200-day moving average. In addition the RSI and MACD are not generating clear signals at the moment.

Given that you have a gut feeling that has you interested in WFC and that there is new support forming along the 50-day moving average at $25.50 making an initial investment at these levels would not be reckless. Plus you will earn the 1.8 per cent yield while you wait.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

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