I use XLF, the financial sector etf, as a proxy for the entire financial sector. While it is difficult to predict the fortunes of any one stock, investing in a sector etf significantly reduces stock specific risk while still allowing for selective investing.
Look at the chart above. Is shows that the financials are hitting strong support at around the 14.9 level. While is is always possible that they crater through this, such a shelf of support usually allows for atleast a cursory bounce to prior support.
So that was the technical aspect of investing. Coming to fundamentals and sentiment, both of these are very depressed wrt to the financial sector right now. Just over the weekend, both the NYT and WSJ carried very negative stories regarding these stocks. Bottom picking is always hard but I believe it affords a good risk reward..place a stop below the support and get out if it looks to be breaking. On the upside, the chance for a strong and quick snapback rally on any slimmer of hope is high.
Disclaimer: I have bought into C calls, MS calls and FAS to play this thesis
Look at the chart above. Is shows that the financials are hitting strong support at around the 14.9 level. While is is always possible that they crater through this, such a shelf of support usually allows for atleast a cursory bounce to prior support.
So that was the technical aspect of investing. Coming to fundamentals and sentiment, both of these are very depressed wrt to the financial sector right now. Just over the weekend, both the NYT and WSJ carried very negative stories regarding these stocks. Bottom picking is always hard but I believe it affords a good risk reward..place a stop below the support and get out if it looks to be breaking. On the upside, the chance for a strong and quick snapback rally on any slimmer of hope is high.
Disclaimer: I have bought into C calls, MS calls and FAS to play this thesis
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