The Big Banks Roared Higher on Tuesday
Banks are strong going into Janel Yellen’s last rate hike announcement at 2 PM EST. The head of the Federal Reserve has monitored five 0.25 hikes or +1.25, still quite low considering previous economic expansions. Most likely banks will continue along their way, shaking out weak hands along its bullish path. The big banks roared higher on Tuesday. BAC, C, GS, JPM, MS, WFC.
Summary
Goldman Sachs (GS)
GS broke higher yesterday, following through after breaking out of a very large base. It took six months of consolidation for institutions to build their positions. Now that fund managers are in the stock, is this a good area to enter a position?
Technically speaking, Bollinger Bands are expanding suggesting a rapid rise in share prices. We would prefer an entry closer to the 9ema.
Zooming out to the weekly time frame, we can see GS has plenty of potential as the current trend unfolds. A measured move (MM) calculated from the depth of the pattern renders a 40 (+/-) move. Therefore, 300 is not out of the question. Volume is present and MACD is above its signal line. All of the moving averages are rising and price action resides above an area of no overhead supply.
Still, a $260 stock price is out of the reach of most investors, so let’s consider some additional prospects.
Regional Banks – The Index
One way to play the inevitable appreciation in bank shares is through KRE. The smaller banks will also benefit from rising interest rates, so we could trade KRE and forget about it for now. Enter the trade and let the big banks do the heavy lifting.
MACD is above its signal line and price is above the bullish moving averages. A follow-through day would confirm a continuation in the current uptrend. Stop if it loses the 9/20ema. RSI should continue rising if you are bullish.
KRE is reflecting the bullish character of most of the stocks in the index. You could also play individual candidates, in addition to KRE as a longer term swing. The top 10 holdings are listed below.
Most of these banks look good for individual swing positions. Chart them and do a little research.
We’ll talk more about banks in today’s broadcast. We will also discuss previous candidates in the restaurant industry group and watchlist candidates from Monday. Join us at 9:20 AM LIVE as we cover these thoughts via LIVESTREAM during market hours.
Happy Trading,
Vinny
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