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Tuesday, July 14, 2009

Banks Bounce

FN: Meredith Whitney upgraded Goldman Sachs yesterday and was less bearish on banks in general. The Banking Index (BKX) broke the declining trend from the May high of $43.80 and is now above the 20, and 50 day EMAs (blue, red lines). Any bounce needs to halt below the declining 200 day EMA (green line) to maintain a longer term bearish posture.

The Regional Banking Index (KRX), is clearly weaker than the BKX. Price is still below all three moving averages, the 20, 50 and 200 day EMAs (blue, red and green, lines). The regional banks are the ones that got deep into commercial real estate loans. They're also the ones that got bailed out the least and are expected to be the "next shoe to drop".

The talk from Meredith Whitney was the catalyst for an oversold bounce.

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