4 Financials for the Long Run…Or Maybe Not
- Posted by Greg Harmon
- on June 29th, 2011
Heading into the end of June it is time to take a look at that long term account and see if there are any adjustments that need to be made. One sector that has been noticeably absent from any rally and may not be in your portfolio has been the financials. With market talk lately that these stock may have found a bottom, are they a buying opportunity? Let’s review these bargains by looking at the monthly charts of three that have been beaten up in the market and the press, Goldman Sachs (ticker: $GS), Bank of America (ticker: $BAC) and Citigroup (ticker: $C) and then one which is always talked of as a leader JP Morgan (ticker: $JPM) to see if they are a good buy. After all just because it is cheap does not always make it a good deal.
Goldman Sachs, $GS
Goldman Sachs bounced of of the declining trendline resistance in January and has been heading lower since. There does appear to be some previous support at 130 near where it currently sits, but with the Relative Strength Index (RSI) pointing lower and the Moving Average Convergence Divergence (MACD) growing negative, it needs to prove that it can hold 130 and bounce before entering long. In the meantime it is in a downtrend and has support next at the 38.2% Fibonacci level at 121.98.
Bank of America, $BAC
Bank of America headed lower off of a double top at 19.65 in April 2010 before finding support at the 50% Fibonacci level at 11.06 and bouncing. It has now fallen back to the 50% Fibonacci. A hold over 11.06 and move higher could warrant a long position with targets of 13.09 and then 15.29, the January 2011 high. A failure to hold 11.06 would call for downside to 9.03, a 61.8% retracement of the move higher off of the March 2009 low. Having printed a lower low in June and previously a lower high the down trend is favored, with the RSI and MACD supporting more downside as well. Not ready yet.
Citigroup has had it the worst not even retracing 23.6% of the the financial crisis fall. It is currently in an ascending triangle with resistance at 50, and being held lower by the Fibonacci Arc. Do not touch it long until it moves over 50. With is currently clinging to support at the bottom of the triangle it is worth watch to see if it fails. Under the triangle at about 40 looks to bring a move lower to about 25 and then 15. The MACD is waning and the RSI, although trending slightly higher, are both pretty flat and do not suggest any big move imminent.
JP Morgan , $JPM
JP Morgan, the best of the bunch, the cream of the crop, led by Jamie Dimon who can do no wrong. This stock has been building a massive inverted Head and Shoulders pattern with a neckline at about 47.50. If it can break that neckline to the upside then the target for the pattern is at least 81.50. The trouble is that the RSI is pointing lower and the MACD is about to cross bearishly negative. If it falls below the right shoulder at 34.89, negating the pattern, then support comes next at 32.50 and then 29.80 below that. Even the mighty look bad.
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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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