Royal is buying City National Bank of California for US$5.4 bln. The stock got to $89 on the announcement. If and when this goes through there will probable not be any stock left to trade but we can always pretend. The chart is relatively clear , from the lows it is either a B-wave, like most stocks, or a 5th wave. Either way the next move should be back down to about $25. This stock trades at a p/e of about 22, compared to RY at about 12. RY only recently got rid of Centura Bank in Florida, despite all the snowbirds they could not make a go of it. The timing is also rather odd. RY is down about 10% over the last few months and the C$ more than that so they are paying roughly 20/25% more than they would have had to do a few months ago.
We did not expect RY to trade above $82.50 ( see Sept. 17th 2014 blog). Of course it did and briefly reached $83.87. It should go down quite a bit further so this acquisition may help that process along. See below;