Eyes on the Big Banks

• Posted by Greg Harmon
• on January 27th, 2014

With the pullback in the indexes led by the banks, there are not many interested in buying them. But a look at the price action the last 3 days in some large banks may be telling a reversal. Here are 3 worth watching for a reversal:

Citigroup, $C, pulled back from the high at 55 and completed the bullish Shark harmonic. What makes it interesting today is the last 3 days of candlesticks. A long red candle, followed by a gap and then a Spinning Top doji. The gaps can be sign of exhaustion and the Spinning Top signals indecision, often reversal. The Relative Strength Index (RSI) is on the edge of being oversold and adds another layer of credence to a reversal. If it gets back over 49.75 it has put in a tradeable low.

JP Morgan, $JPM has that same pattern of candlesticks. Three good sized red candles with gaps in between and then a small real body with longer shadows today. The RSI on this is already turning higher. Trading this against the 100 day Simple Moving Average (SMA) at 54.87 looks ok now and better on a move over yesterdays open at 56.

Wells Fargo, $WFC, may be the best of the 3. The same pattern of gapping moves lower and a small body candle with long shadows today. I say it may be the best because the RSI is turning back higher on this one without ever moving below 50. On a tight stop against today’s low, or looser with a stop under both the Bollinger bands and the 50 day SMA, perhaps 44.75, you could give this one a go now.

Update: I bought some Wells Fargo shortly after this post went up.

Want to learn more about Dragonfly Capital Views?

Dragonfly Capital Views Performance Through January 2014 Expiry and sign up here for the free 7 day trial before you pay.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

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