Summary:
- Charles Schwab (NYSE:SCHW) fell 10% and TD Ameritrade Holding (NASDAQ:AMTD)fell 25% on Tuesday, after announcing it was cutting commissions to zero.
- Our view is that this event adds to already bearish indications for these companies and others in the sector.
Charles Schwab (SCHW) Stock Weekly Chart
Schwab and TD Ameritrade announced that they would eliminate commissions on all transactions for stocks, ETFs, and options. Commissions comprise 3-4% of Schwab’s total revenue and 25% for TD Ameritrade.
Schwab CEO Walt Bettinger emphasized, “This is our price. Not a promotion. No catches. Period.” In doing so, these firms are following in the footsteps of competitor Robinhood Markets, which has gained significant market share using a similar business model.
Ameritrade (AMTD) Stock Weekly Chart
Our approach to stock analysis uses market cycles to project price action. Looking at the charts for both companies, we can see that they are in the declining phase of their current cycles, with several weeks remaining.
Both stocks have also broken the lows from which they started their respective cycles, which is a bearish indicator. AMTD is even more bearish, given the amount by which it has exceeded its low. Our target is $34.50 for AMTD.
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