Did Bank Stocks Just Bottom?
The market rose again yesterday, and the bulls looked good. Buyers built
on momentum earlier in the week, where they protected 1100 and 1115
support. And yesterday those same buyers were able to rally SPX back over
1155 resistance. Volume was good during the advance and technology
stocks, small caps and banks led the charge higher.
If the market is going to rally hard, three things need to happen. And
these are the same three things I looked for from the bulls last week. In
a strong rally (bullish), banks should, at least, rise at the same pace
as the market.
Small caps should rise more than the SPX. And the dollar should decline.
Until I see two or three of those actions occur, any move higher is
unlikely to last.
The banks recovered very well yesterday. And especially the big banks,
JPM, BAC, GS, MS, WFC, up 5%, 8.8%, 4%, 4%, 3.5%, made impressive
moves.
While I prefer the market continued to advance today, the bulls earned a
freebie. The bulls had a great week. And dare I say it, put in a long
term bottom.
Bottom calls take a long time to confirm. I loaded up long positions on
Tuesday because it looked like an opportunity for a bottom. But even if
it doesn't end up being the bottom,
we should be able to profit well from our six long positions.
Two of those positions were taken off yesterday for 13% and 9% gains. But
we still have open positions in SLT, ATML, SYNA and PLCM. I have some
great trades lined up, and will prepare a subscriber video this
afternoon.
For more information on this service, which
continues to beat the market nearly every month, please click
here.
Today, I would like the bulls to retest 1175 resistance and stay above
1131 support. Obviously, staying above 1155 and rallying past 1175 would
be better, but SPX has recovered 6.4% from its low; buyers should be
happy with that turn. Next week, the bulls need to challenge 1197 and I'd
prefer they take out 1175 by Tuesday.
The U.S. indices will get some help from Asia where stocks were markedly
higher. Also, in Canada employment came in higher than expected. Canada
added 60,000 jobs in September, which is better than the 5,000 lost in
August and the 15,000 expected by analysts.
The U.S. had a big jobs announcement of its own today. Nonfarm payrolls
were announced this morning, which showed 103,000 additions and a 9.1%
unemployment rate. The consensus view was for 65,000 new jobs with a 9.2%
unemployment rate.
