The new administration aims to dismantle The Dodd Frank Act. In so doing, much of the banking regulation that hampered lending practices will be stripped away. Over burdened smaller banks will be greeted by more a profitable lending environment, with less regulation.
Whether you think this is a good idea or not, banks bolted higher on Friday. This will likely lead to more buying activity as banks consolidate.
Morgan Stanley is ranked #1 by Investors Business Daily. The tight consolidation, remained sideways for the past 6 weeks, failing to pullback like many other banks. Price action breached and closed above the pivot highs on Friday, printing a bullish candle. This momentum produced a 10e/STO/MACD setup (from the book) on higher volume. In addition, Bollinger Bands are expanding, while RSI, STO and MACD turn higher. Earnings are estimated to be on 4/19/17.
Buy 44.60 or better, with a stop if price action drops back inside the rectangle pattern shown.
Goldman Sachs printed a Marubozu candle on the news, as prices traded higher throughout the day, closing at the highs of the Friday session. A 10e/STO/MACD setup is about to trigger, once MACD moves above its signal line. A SAR buy signal triggered on Friday. Earnings are 4/17/17.
We like OZRK for the same reasons. RSI, STO and MACD are turning higher. Volume is increasing. Earnings are scheduled for 4/10/17.
CGNX reports the following week, on 2/16/17. We would be interested in this stock if price gives us a better entry, by trading inside Fridays price action momentarily. Stop below Friday’s low.
RDN will probably garner more attention, with Dodd Frank on the chopping block. The necessity for mortgage insurance will increase, as more homes are sold. We see tight Bollinger Bands, price above the 9/20ema with a MACD cross signaling an increase in bullish momentum. Stop if price action falls back inside the triangle pattern and falls below the 9ema. EPS 4/25/17.
THO needs to produce a follow through bullish continuation candle today, to keep us interested. Price will likely breach the upper bounds of this rectangle, if bullish momentum returns on higher volume. In addition, if trading takes THO above VBP resistance, we see no overhead supply to impede higher levels. Stop on a loss of the 9ema. Earnings 3/06/17.
IIIN – We are watching this building materials stock. The company produces rebar steel used in concrete foundations, footing and barrier walls. Many companies in this industry group will likely see more buying activity, but none have a #1 ranking by Investors Business Daily except Insteel Industries (IIIN). We are watching for volume into its next earnings report on 4/19/17.
ITA is breaking out of a symmetrical triangle pattern. Tension around the globe will likely send many aerospace and defense stocks higher, so trading this ETF will remove the need to watch earnings or pick the right stock.
The Health Care sector performed the best over the past week. Biotech, Pharmaceutical and Medical Device companies should garner some of your focus this week. If institutions are buying, so should we.
Mylan was pointed out by Russell. A break above current levels will trigger trading desks to buy as well. Note the volume over the past week and the MACD cross signaling a return to bullish momentum. MYL reports on 3/1/17.
Also watch MRK. The stock continues to power higher on increasingly obvious volume. Institutions are buying. The company reported a beat on 02/02/17.
Please forgive me if my commentary is interpreted as political. It isn’t, since it is my job to point out areas on interest no matter what the reason. You are here to make money, not debate politics.
Happy Trading – CV
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