BlackRock stock analysis: Will the rebound sustain?

Charts suggest BlackRock could have topped out in the short term

Climate activists protest outside BlackRock’s Manhattan HQ on 29 October 2019.                                 
Extinction Rebellion protestors outside BlackRock’s Manhattan HQ on 29 October 2019. The activists claimed BlackRock is the world’s biggest investor in climate disasters – Photo: Shutterstock
                                

BlackRock Inc. released third-quarter numbers on 13 October that were ahead of analyst estimates, according to FactSet. The world’s biggest asset manager, which is headquartered in New York City, reported a revenue of $5.05bn and earnings of $1.69bn – or $10.95 a share – surpassing analysts’ expectations. 

FactSet analysts had expected BlackRock to report earnings of $9.39 a share on revenue of $4.82bn, in line with last quarter’s revenue. However, the company’s total assets under management (AUM) of $9.46trn were marginally below analysts’ expectations of $9.64trn and lower than the company’s $9.49trn AUM of the previous quarter.

Kyle Sanders, an equity research analyst for the St Louis, Missouri-based financial services firm Edward Jones, said: “The lighter AUM is reflective of the pretty large sell-off in the market, with equities falling and pressure from rising interest rates,” as Barron’s reported.

Asset managers have benefitted from the reopening of the economy and the sharp rally in global financial markets from the March 2020 panic lows. Going forward, rising interest rates and tapering of the massive stimulus may make it difficult for smaller players, but BlackRock – with its massive size and wide reach into every segment – may be better off and more able to overcome the challenge.

According to Yahoo Finance, the consensus analyst price target for BlackRock is $983. Will BlackRock’s stock go up from current levels and reach its target objective? What do the charts suggest? Read our BLK stock analysis to find out. 

BlackRock share price technical analysis: weekly chart

BlackRock share price weekly chart
BlackRock share-price technical analysis: weekly chart – Credit: Currency.com

BlackRock’s stock price has been in a strong uptrend since bottoming out at $324.01 in March 2020. The stock has been in a corrective phase for the past few weeks since hitting an all-time high of $958.44.

The bears have pulled the price below the 20-week exponential moving average (EMA), suggesting that the short-term momentum is weakening. However, a minor positive is that bulls have successfully defended the 50-week simple moving average (SMA).

The 20-week EMA is flattish and the relative strength index (RSI) is close to the midpoint, indicating a range-bound action in the short term. 

If bulls push and sustain the price above the 20-week EMA, the stock could retest the all-time high. A break and close above this resistance could open the doors for a rally to the psychological level at $1,000.

On the contrary, if the price turns down from the current level and breaks below the 50-week SMA, the correction could deepen to $669.60.

BlackRock share price technical analysis: daily chart

BlackRock share price daily chart
BlackRock share-price technical analysis: daily chart – Credit: Currency.com

BlackRock’s stock price completed a bearish head and shoulders (H&S) pattern when bears pulled and closed the price below the neckline on 4 October. 

This breakdown appears to be a bear trap, because the bulls quickly pushed the price back above the neckline on 5 October. The bears again tried to sink the price below the neckline on 12 October but failed. 

The RSI has since formed a bullish divergence, suggesting that the bearish momentum may be slowing. Aggressive buying on 13 October has pushed the price above the 20-day EMA.

If bulls sustain the price above the 20-day EMA, the pair could gradually rise to the 50-day SMA. This is an important resistance to keep an eye on because if this is breached, the stock may begin to ascend towards its all-time high.

On the downside, the bears will have to sink and sustain the price below $817.47 to gain the upper hand. The stock could then drop to $792.42 and eventually to the pattern target at $715.56.

BlackRock stock: Buy or sell at these levels?

BlackRock’s share price analysis shows the stock has formed a bearish H&S top but the bulls are attempting to invalidate it. A break and close above $900 will signal that the bears are losing their grip, while a drop below $817.47 could start a strong correction.

The views and opinions expressed in this article are those of the author alone and do not constitute trading advice. Trading and investing involve substantial risks, and you should always do your own research or contact your financial advisor before arriving at a decision. Never invest more than you can afford to lose.

Trade BlackRock stock: BlackRock shares price

BlackRock, Inc.
Daily change
914.43
Low: 900.21
High: 915.01

Further reading:  JPMorgan Chase beats third-quarter expectations

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