Financials Oversold Ahead of Key Earnings Reports

JPMorgan Chase & Co (NYSE: JPM) and Wells Fargo & Company (NYSE: WFC) will report earnings today and both stocks are oversold on a number of indicators. Oversold stocks can react bullishly to small surprises and earnings reports could be the catalyst for a large move.

Direxion Financial Bull 3x Shares (NYSE: FAS) is a leveraged ETF that offers exposure to the financial sector and could be among the biggest movers on the earnings releases. FAS ended trading yesterday with a PowerRatings of 9.


PowerRatings are based on the relative strength or weakness of particular stocks or ETFs. The higher the rating, the greater the one week historical gain has been for stocks and ETFs with that rating. For best results, enter trades on stocks with a PowerRatings of 8 or higher with a limit order 3-7% below the previous day’s closing price. Higher % limit entries have historically shown a greater percentage of winning trades but higher % limit orders also reduce the chance of trade execution.

In the past, buying stocks with a rating of 9 on a 3% pullback the next day and selling five days later has been profitable 75% of the time. The average winner has gained 4.3%. Other entries and exits also show high winning percentages and large average gains.

XRT should be considered a buy under $85.66.

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All data is as of the end of day on 1/13/2014.