BAC - WAIT
BAC slightly broke over its 50 day MA, but I would only give BAC a BUY SIGNAL if it manages to stay above the 50 day MA for a couple days. The down trend hasn't been broken through yet, but today is perhaps an indication of what is to come. For now I would wait and see if BAC manages to continue higher for the next two days while remaining above the 50 day MA.
GS - STRONG BUY SIGNAL
GS has given us a STRONG BUY SIGNAL today by both breaking strongly above its 50 day MA and by forming a three white soldiers pattern. An increase in volume after each subsequentt day also adds to the strength of this pattern.
Three White Soldiers:
"The"three white soldiers" is considered by some candle theorists as one of the most bullish candle patterns. The three white soldiers pattern is most potent when it occurs after an extended decline and a period of subsequent consolidation. When a particular stock posts a decline followed by a sideways movement, the appearance at that point of three white soldiers signals that higher prices are likely ahead.
The first of the three advancing white soldiers is a reversal candle. It either ends a downtrend or signifies that the stock is moving out of a period of consolidation after a decline. The candle on day two may open within the real body of day one. The pattern is valid as long as the candle of day two opens in the upper half of day one's range. By the end of day two, the stock should close near its high, leaving a very small or non-existent upper shadow. The same pattern is then repeated on day three."
Source: http://web.streetauthority.com/terms/t/threewhitesoldiers.asp
Although it's always preferable to wait and see if a stock manages to stay above a moving average for a day or two after it breaks above it, in the case of GS I consider the three white soldier pattern enough to confirm the beginning of a new up trend. The major down trend for GS appears to be over, and now looks to continue higher.
JPM - BUY SIGNAL
After trading in a major down trend, and sideways last week, JPM has moved strongly higher today to break above its 50 day MA. The stochastic has also given us a BUY SIGNAL today. Obviously we want to see JPM remain above the 50 day MA for the next few days, as pull back below the 50 day MA could send JPM back into its sideways or down trend.
MS - WAIT
Despite a big break out and an inverted bottom hammer pattern, I would wait for MS to break above its major down trend before taking a position. We want to wait and see MS continue higher, break above the 50 day MA stay above it and above the upper down trending line. Once all of this happens, it will be safer to take a long position with MS. The MACD did give us a BUY SIGNAL also today, which gives MS a stronger chance of managing to break its major down trend, which I do expect to see occur, given the fact that several bank stocks have already done so today.
Yoel,
ReplyDeleteFirst of all, Wish you a very happy new year!
Another up day today for banks and gold. Out of the stocks that you have listed, which one would you recommend to go long? Would you update with some support and resistance levels.
Also,Casino stocks seem to breaking their downtrend too.
Thanks,
In terms of which bank stock to go long, that's a good question. Today when I look at the charts of practically every stock, they all show the same pattern and have all broken their down trend and crossed over their 50 day MA either today or since yesterday. The bank stock that seemed to be lagging behind others in terms of the stochastic is BAC which has given us a BUY SIGNAL today. You could pick any other stocks, and probably achieve similar returns. Note that BAC has relatively high Beta at 2.41, compared to most who are around 1.3. So this all depends on how risk averse you are, and you should look at the beta to make your decision on this one. GS is the safest choice but if in fact bank stocks are moving higher, you should not achieve as high return with GS. However, in the event of a pullback GS would fall by less than other bank stocks.
ReplyDeleteFor support and resistance levels, you should focus on the 50 day MA for all bank stocks for now. Up until yesterday and today, this was the resistance level and it is now the support level. So if BAC were to cross back below the 50 day MA, this would give us a SELL SIGNAL.
Indeed casino stocks now all appear to be finally breaking their down trend. LVS and WYNN gave us a BUY SIGNAL yesterday, which was confirmed today. While MGM gave us a BUY SIGNAL today, also by both breaking its down trend and its 50 day MA. If I had to choose among these 3 stocks, I would pick LVS which seem to outperform other casino stocks. This could be associated with the fact that LVS has more exposure in Macau. But remember that casino stocks are very volatile with high betas over 4.
Thanks for your quick and valueable feedback!
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