Financial sector bottoms?

[john_for_u80]

I agree with Chartguru about his call saying that "financials have bottomed".

I would like to post some charts which I have come across and some details.

Chart 1: "The justification for this bullish call came from the KBH Banking Index (BKX), which had broken the first-quarter lows at 75 and headed straight toward multi-decade support between 55 and 60. "

Chart 2: "I now believe the current recovery attempt will end at the 38% or 50% retracement of the long selloff. Notably, these numbers would place the index right at new channel resistance between 75 and 83. It would also correspond with the declining trend line generated by the weak rallies embedded within the downtrend"
"A strong bounce into the 80s might be optimistic, given major resistance created by the breakdown under the triple-bottom pattern posted between January and March. That price level corresponds directly with the 38% retracement. It's also just 5.5 points above Wednesday's closing level. "

Chart3: "Apple plunged from a post-split bubble high at $37.60 in 2000, selling off more than 80% in the next nine months. It then bounced from $7 to $14 and dropped into a dead man's base for more than three years.

Of course, the late-2000 rally looked like a perfect bottom, attracting a fresh batch of shareholders certain they were making the buy of the century. As it turned out, these folks learned a painful lesson about opportunity cost, with their investment looking like dead money while the rest of the equity universe enjoyed a fabulous recovery."

[wallstreetsedge]

i wouldnt say they bottomed.. btw that skf hit my target again today john :P keep the faith!!

if anything its only a little harder for them to continue downward, theres still a big mess in the financial industry. i dont think itll be cleaned up until next year. financial companies are still in the middle of auctioning off their debt

[john_for_u80]

i wouldnt say they bottomed.. btw that skf hit my target again today john :P keep the faith!!

if anything its only a little harder for them to continue downward, theres still a big mess in the financial industry. i dont think itll be cleaned up until next year. financial companies are still in the middle of auctioning off their debt

Yeah, I sold it too soon in the morning.

Also by mistake I sold some of my shares yesterday. I thought I am putting a market buy order and I kept sell order by mistake, that reduced my position.
Right now I am out of most of my cash because I have a cash account which takes 3 days to clear the trade settlement.
Hope I get some on Monday :)

[wallstreetsedge]

i think it might head to 130 before heading back down.. if it does id look for 118 as my first target

[Pinguin]

I have started to look at XLF since I agree with the overall concensus of the thread. My question still remains at what cost to the American public will the gov't interact witht he financial sector?

I think we will see some short-term optimism over the next couple weeks....as long as nothing drastic happens in Beijing.

[Jimmy058910]

It'll be interesting to see what financials do tommorow after the beating they took today, if they take another large hit, I will be putting some dough in on Monday on a bounce back no question about. If they do alright tommorow, I am going to stay away as the industry is a mess.

Hopefully oil will make a little run tommorow, which will keep the financials down tomm. setting me (and you guys) up for some shorts on monday :- )

[englishman26]

Everyone's getting geared up for the shorting to start again next week. Some the best bad news comes in the financials at the weekend so I actually like to be in SKF over the weekend. And believe, most of the surprise news wil be bad at the moment because. . .well. . . things are bad!

I'm actually in England at the moment. Feels like things are just beginning here.

I don't think we're at any kind of bottom in financials yet because we're no where near any kind of bottom in housing yet.

GLTA.

[Horsefish]

This is probably a good thread to ask this dumb question on.
Those short term loans that the FED is giving out ( to the tune of billions) are being sucked up by investment banks and other financial institutions at a rate of 2.5%. Those institutions are then lending the money out at 6+%. That generates income. But aren't those bank loans longer term? Like 15 to 30 years? If that is the case (and I'm probably wrong) How will the FED ever be able to end the discount window program? That would suddenly suck almost all liquidity out of financial markets.

[Jimmy058910]

It happened today and oil bombed

[StockHopper]

Yes things are bad, but is this already priced into these financials of which many are down 50 - 70% from their highs.

I say yes. Bought into UYG at close. I think the financials may rally for a few weeks.

[wallstreetsedge]

It happened today and oil bombed

i think oil has to start rebounding, imo its a bit oversold now

[Supreona]

nah, I think it heads lower. The bubble has officially burst. When it fell through $120 it was done, when it falls through $110 I'm gonna go buy a hummer. This is not a dip. Its over. Unless theres some catastrophic event to kick it back up, its donezo.

[john_for_u80]

nah, I think it heads lower. The bubble has officially burst. When it fell through $120 it was done, when it falls through $110 I'm gonna go buy a hummer. This is not a dip. Its over. Unless theres some catastrophic event to kick it back up, its donezo.

Oil can bounce to 117- 120, not sure though. Eventually Oil goes to 105-110, its next stop!

Chart shows 200DMA at 110
http://stockcharts.com/h-sc/ui?s=$wtic&p=D&b=5&g=0&id=p29735565936

One chart attached below shows support at 105(trend line support). Its a weekly chart so I don't think that Oil directly moves to 105 without any bounce.

[madcowdisease]

nah, I think it heads lower. The bubble has officially burst. When it fell through $120 it was done, when it falls through $110 I'm gonna go buy a hummer. This is not a dip. Its over. Unless theres some catastrophic event to kick it back up, its donezo.

For the sake of the US and global economy let's hope you are right. Inflation is absolutely rampant at this time even though Bernanke and his "core" inflation numbers won't admit it.

[john_for_u80]

"The OBV indicator is a running cumulative total of upside and downside volume. It's calculated by adding the volume on up days and subtracting it on down days. It is clearly diverging with the price of the index. Not a good sign."

BKX (Bank Index) chart attached below!

[CSSVT]

I like oil to go down consistently till 80, then it will mull around for a few weeks hovering between 80 and 85 till it eventually creeps back to 100 where it stays until next summer or so.

[madcowdisease]

Oil will go down as long as the broader averages continue t advance and there isn't a threat of a reversal. Oil's advance was a run for returns other than the markets since it was the general consensus the apocolypse was upon us (hyperbole inteneded). If traders and the big money players no longer fear the market then they will pull their funds out of futures and put it back in to equities.

[Horsefish]

The FED is waiting to see what happens with inflation. If the core rate does not spike then they are likely to cut the discount rate to help banks. If that happens, the financial sector could soar.

[madcowdisease]

The FED is waiting to see what happens with inflation. If the core rate does not spike then they are likely to cut the discount rate to help banks. If that happens, the financial sector could soar.

"Core" inflation is a crock. I understand the volatility aspect of excluding food and energy but how can one ignore the two essential components to life that affects all of us and consumes a large portion of the annual income - and that wedge of asset allocation for these two inputs only gets bigger the further down the socio-economic ladder you go.

Anyone who follows this is basically saying to themselves, "let's manipulate the numbers enough until they tell us what we want them to."

[madcowdisease]

Does anyone believe we could be forming a bottom in XLF? As the broader averages are reaching lows not seen in 4 years XLF seems to be holding its low formed on July 15th. Is it safe to say now that the government has intervened a total collapse has been averted and it is time to buy the bottom in the financials?

Granted I'm not looking for a vault to $35 soon but it would appear the downside is limited minus the USA going under and financial armageddon. Anyone else thnk this could be a good buy at these levels?

[john_for_u80]

Does anyone believe we could be forming a bottom in XLF? As the broader averages are reaching lows not seen in 4 years XLF seems to be holding its low formed on July 15th. Is it safe to say now that the government has intervened a total collapse has been averted and it is time to buy the bottom in the financials?

Granted I'm not looking for a vault to $35 soon but it would appear the downside is limited minus the USA going under and financial armageddon. Anyone else thnk this could be a good buy at these levels?

Market needs a washout and we have not yet got that! I want to see very very huge volume when the market makes its final wash!

If you are thinking of getting long then buy small position at a time with protective stops, so that if stock dips further, you can buy it at a cheaper price!

Say you want to buy total of 1000 XLF. Start with 100-150 with stop on half or 2/3rd of the position. Buy the dips slowly with patience :)

Market will not run away without you. There is lot of pain and financials needs to consolidate for longer periods!

[madcowdisease]

Market needs a washout and we have not yet got that! I want to see very very huge volume when the market makes its final wash!

If you are thinking of getting long then buy small position at a time with protective stops, so that if stock dips further, you can buy it at a cheaper price!

Say you want to buy total of 1000 XLF. Start with 100-150 with stop on half or 2/3rd of the position. Buy the dips slowly with patience :)

Market will not run away without you. There is lot of pain and financials needs to consolidate for longer periods!

Cheese and rice!!!

I thought I was legging in slowly only to see two limit buys trigger with today's massive sell-off in XLF. How much lower can this thing go? What's the next weigh station - single digits?

[aiki14]

Cheese and rice!!!

I thought I was legging in slowly only to see two limit buys trigger with today's massive sell-off in XLF. How much lower can this thing go? What's the next weigh station - single digits?

Me too, bought some GS yesterday thinking of it as starting a position, but I think the upside is better than the downside for investments. The bitch is that the hedges are ridiculously expensive as puts are highly priced. I would be trading short, hedged with calls if I could.

I am going up to NY tomorrow to evaluate some alternate investments to park some cash in, something I would not have dreamed of a year ago.

[madcowdisease]

Me too, bought some GS yesterday thinking of it as starting a position, but I think the upside is better than the downside for investments. The bitch is that the hedges are ridiculously expensive as puts are highly priced. I would be trading short, hedged with calls if I could.

I am going up to NY tomorrow to evaluate some alternate investments to park some cash in, something I would not have dreamed of a year ago.

Good luck. The best return I have had lately is my savings account at 3.25%. This market is absolutely devastating. Hopefully we can get supprt at 8000 and the sidelined money will move in to the markets.

[englishman26]

The BKX is now at multi-decade lows. 60 was the 20 yr support level and it broke through that. It seems impossible to think that they could go below here but there is only fear in the market at the moment so really they could go anywhere.

It sounded like from some comments today that the credit markets were starting to free up a bit. Maybe then this really is the low.

How is that $62 trillion CDS market ponzi scheme going to get deleveraged though??? A market based on fake insurance that didn't exist 7 years ago and is now worth more than the annual GDP of the whole world?!?! This scares the crap out of me!

[madcowdisease]

The BKX is now at multi-decade lows. 60 was the 20 yr support level and it broke through that. It seems impossible to think that they could go below here but there is only fear in the market at the moment so really they could go anywhere.

It sounded like from some comments today that the credit markets were starting to free up a bit. Maybe then this really is the low.

How is that $62 trillion CDS market ponzi scheme going to get deleveraged though??? A market based on fake insurance that didn't exist 7 years ago and is now worth more than the annual GDP of the whole world?!?! This scares the crap out of me!

We're going to print the shi'ite out of some dollars. Hello inflation.

btw, anyone heard the rumor the Fed & Treasury may be buying the depreciated value of people's homes? e.g. if you bought a home for $500K and now it's worth $400K the gov't will allow you to refinance at this new value.

Any theories on how this is going to affect the dollar, taxes, our financial wellbeing and credit worthness as a country?