National Bank of Canada Stock Faces Corrective Phase, Raymond James Says

Analysts at Raymond James are forecasting a period of short-term weakness for National Bank of Canada (TSE:NA) shares, according to a recent research note. The firm points to negative price momentum, weakening relative strength against the TSX Composite, and early indications of institutional selling pressure as signs of a developing corrective phase.

Technical Headwinds Emerge

The stock's technical posture has weakened after recently trading below its 50-day moving average, a key short-term trend indicator, at approximately $224.18. According to Raymond James, this positions the stock to challenge its first significant support level near $212.11.

A sustained close below this level would confirm that an intermediate-term correction is underway. This could open the door for further declines, with the next major support area identified at $210.47, which represents a potential 1.9% downside from current levels.

Downside Scenarios and Key Levels

Raymond James outlined a series of critical support levels that investors should monitor. A weekly close below the $210.47 mark could trigger a more significant downturn.

Key potential support zones include:

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• The 40-week moving average at approximately $197.28, representing an 8.1% downside.
• A major long-term support level near $187.92, a 12.4% potential decline.

The firm suggests that an inability for the stock to stabilize above its 40-week moving average would be a signal for investors to consider reducing exposure. However, a significant volume consolidation zone between $170 and $180 is expected to provide substantial support during any deeper correction.

Relative Strength and Reversal Signals

While the near-term outlook is cautious, analysts noted some mixed signals in relative performance. The stock's momentum versus the S&P/TSX Capped Financials Index is improving on a weekly basis, suggesting it may be trying to establish a medium-term price low within its longer-term uptrend.

For a bullish reversal, a breakout above the resistance level near $222.99 would be required. Such a move would re-establish National Bank of Canada's stock as a relative leader within the Canadian financials sector, according to the firm.