Thursday, January 22, 2009

Banks-- don't bank on 'em for the long haul

XLF on the ten-minute graph (above) we see that the price action is showing an ascending triangle and the RSI gives it an oversold reading.  Resistance and support are marked on the BMP image.

WFC looks very similar to XLF and may be good for a trade here out of the oversold condition, but I would put a tight stop on this one.  The risk reward does not look that good to me for anything but a day trade.

WFC, like XLF, in the daily graph (below) is showing declining 50 and 200-dMA's and the 50 has crossed below the 200-dMA which is a negative sign.  Regionals look even worse, which is evidence by the thrashing that HCBK took despite pretty good numbers.  I prefer not to fight the tape even though I realize that a big bump up can occur at any time.

Most sectors are showing the 50-200 dMA "death cross", with the notable exception of biotechs.  GERN is a representive stock here.  Also,  STEM could be considered on any pullbacks. 

Another sector worth a gander is gold miners.  It's a little quirky, but the technicals are showing great price movement.  I stay away from individual gold mining stocks because of the vagaries of valuation.  Also, GLD and SLV look relatively strong on the long side.

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