Trading By the Numbers: Has Jefferies Group Hit Bottom?
Will Jefferies Group (JEF) become the second shoe to drop in terms of U.S. financial exposure to the European debt crisis?
The first shoe was the implosion of MF Global (MF), which declared bankruptcy on October 31 as a result of a massive quarterly loss due to trading in European bonds. Sellers sent shares of JEF lower on Thursday as a result of concerns that the investment bank might have similar exposure to the volatile European bond markets. After dropping by more than 20% intraday, the stock rallied to finish off by just over 2%.
What’s worth noting, potentially, is that Jefferies Group has been in a bear market downturn for some time – at least since the spring of 2011. In fact, JEF has had its share price cut in half since that time.
Whether or not JEF is a good, special situations, trade to the upside remains to be seen. The stock has a neutral rating of 5 out of 10, suggesting that there is no real edge in the stock to the upside or downside.
Perhaps the biggest lesson for traders when thinking about JEF is the fact that the market had long ago made its verdict on the stock, sending and keeping it below its 200-day moving average for months.
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One area where short term traders may do a better job of finding high quality weakness in bull market territory is in auto dealerships. Pulling back and earning high ratings ahead of trading on Friday are such companies as Autonation (AN).
AN pulled back by well over 1% in Thursday’s trading, finishing lower for a fourth day out of the past five. Thursday’s close marks the stock’s second finish in oversold territory in the last three trading days.
The stocks in today’s report were drawn from the data and research available through PowerRatings. To find out more, click here.
David Penn is Editor in Chief of TradingMarkets.com