Let’s Look At The Banks
Was yesterday’s sell-off
simply a healthy pull-back or a vote that casts some doubt on the
recovery? I would err on the side of caution and go with the former, the
evidence does support a turn-around. However, tech stocks may in fact be
factoring in news that does not support the run that most of these money losing
stocks have been on.
The Texas Instruments
(
TXN |
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Chart |
News |
PowerRating) and Nokia
(
NOK |
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PowerRating))
news was not received well. However, other tech companies are either optimistic
or at least holding tough. But what about the banks, typically the driver of
stocks? The recent spike in interest rates has hammered the refi and mortgage
business. Witness stocks like Washington Mutual
(
WM |
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PowerRating).
Major money center banks continue to be
under pressure, take a look at the chart of the Bank Index (BKX) below, it is at
critical levels. You will also recall that banks have lagged in the recent
rally. Bear in mind the old saying:
“as the banks go; so goes the market”
Turning to the opposite end of the spectrum, the
gold stocks. These wonderful trading/investment vehicles hit an air pocket
yesterday. They have had a great run and may simply be pausing. From a
longer-term perspective, I will be looking to add to these positions as
longer-term trades. In the meantime, Newmont Mining
(NEM) continues to offer 1 to 2 decent set-ups on the 5-minute chart each day.Â
The stock can be a bit erratic, but it has good range. Keep your eye on it.Â
The chart below illustrates how I approach not only NEM,
but also all other stocks on an intraday basis presently. The first thing you
will notice is that the style is almost identical to
HVT, in the case below,
1. Selling-short into resistance (60 period ema)
2. Timing the entry to coincide with a
stochastic cross
The duration of the trades is a bit longer, but
it is an adjustment that needs to be made in the current market environment.
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As always, feel free to send me your comments and
questions.