BAC on Repeated Sell Signals
By Barry Ritholtz - January 15th, 2009, 12:15PM
This morning Bank of America hit a new 52 week low, and traded at its lowest level since 1991.
Fusion IQ’s Timing Signals put a new sell on BAC after the close on Tuesday. Since it is also such a low rank in Fusion IQ we would have not suggested be long for a while, however these “heads-ups” signals can sometimes be your last chance to get out.
Citigroup has been on a Sell signal since the 12th of November 2008 and looks like it will be testing the November lows.
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January 15th, 2009 at 12:21 pm
Funnest new headline just out
Citigroup – Bank of America-BAC shares being defended at Citigroup
Citigroup does not believe the government will force Bank of America to raise common. Shares are Buy rated
January 15th, 2009 at 12:29 pm
Looks like Martin Luther King day may not be the only holiday the market is closed within the next week, lol.
January 15th, 2009 at 12:36 pm
Action needs to be taken between this afternoon and tomorrow morning otherwise things will be out of control again and all gains in the credit market will be lost.
January 15th, 2009 at 12:52 pm
I tried to go long WFC today, bought in at 20.50, got stopped out at 19.15. not good……
WFC is down close to 17% TODAY??? this is supposedly one of the STRONG banks. Yikes. This country is in deep, deep doo, doo. Maybe we should just throw out all the 50+ year olds and let the country be run by Gen X and Y’ers who use a little COMMON SENSE now and then. the boomers have really, really fugged up this country… Anyone disagree?
Thankfully I’m 90% cash/money markets right now. However, I’m a bit concerned my Merrill account could be at risk with BAC tanking…..
January 15th, 2009 at 12:52 pm
Let them go down it is time to start over.
January 15th, 2009 at 12:55 pm
Supply greater than real wages’ capacity to consume creates an imbalance temporarily solved by acquisition of new debt. The key word is temporary – and time’s up.
There is no fix, no potion, no magic wand, Harry Potter, or Peter Pan. There is only the crushing weight of excessive debt grinding all below it into oblivion – back into balance – forcing a match of productivity to wages, of real supply to real demand.
It will end eventually – but it won’t be today and it won’t be tomorrow.
January 15th, 2009 at 1:01 pm
borchers,
weren’t you buying the banks yesterday?
January 15th, 2009 at 1:02 pm
No worries. Dennis Kneale claims it’s just “profit-taking”. I’m not kidding. He was, thankfully, gently slapped down for that inane remark.
@ben22: Yes, borchers was buying the banks yesterday despite our best efforts to dissuade him from that big mistake. This from the guy who claimed to be right about the markets “9 times out of 10″, but I digress.
January 15th, 2009 at 1:16 pm
BR – Looks like several Buy signals and Sell signals from your print…is it just me, but none of those trades look profitable?
January 15th, 2009 at 1:21 pm
I was talking to a PE guy at Cerberus back in late December and he didn’t see the economy improving until the second quarter of 2010. With the news coming out this week I wonder if his opinion will change.
January 15th, 2009 at 1:23 pm
Barry,
I liked citi-morg for the combined bank, but I think I vote for mor-cit.
January 15th, 2009 at 1:24 pm
After the May to July 08 breakdown, how could anyone believe that BAC was going to weather this period. The bigger the institution the greater the magnitude of the debt unwind- seems almost axiomatic to me. The truly frightening aspect of the financials’ death spiral is the fact the vast quantity of cash thrown at it seems to have done little if anything to detain and reverse the process. It’s as if throwing gasoline on a fire only makes it bigger. Unforeseeable.
Regarding Jdamon33′s recommendation regarding boomers, as a gen xer, I must admit that my reptilian brain says ‘yeah! throw them into the dark of night, let them gnash their dentures and caps!’ but the truth is the only way out of this (IMHO) is hard work and we need to reject the urge to reduce the bounds of the economy and to exclude. We need to value human capital and put it to work well. Can a good solution be generated and enacted if the largest generational cohort is chased out of Dodge? Doubtful.
WRT to technical signals, one could reasonably come to the conclusion that the early chapters of market narrative already foreshadowed the denouement. By the Spring of 2006 the die had already been cast.
Any buys in these markets should fake long and go short or step out of bounds after 3 or 4 yards. Anything bought long today will almost certainly return a bumper crop of bitter tears come May. If you think in terms of narrative what good news could possibly be around the corner. Will Obama discover that the deficit isn’t beyond all human ken? Don’t think so. More bankruptcies, more implosions, more liquidations. Things fall apart sometimes.
Profit seems to be rather ephemeral and debt eternal.
January 15th, 2009 at 1:28 pm
Own XLF and still do. No stops for me. Bought some more today. Next look would be about $8 if it gets there.
This is a panic. JPM and WFC are doing okay for the situtation but yet the street is panicked.
January 15th, 2009 at 1:31 pm
@JB: JPM and WFC are “doing OK”? Seems we though we thought that about BofA just a few months ago. Let’s revisit this one in a few months too.
January 15th, 2009 at 1:41 pm
Jadamon33:
Is this the visualizaion of the future that most Gen-Xer’s have?
Do you think this is what our depression will look like?
http://www.boston.com/bostonglobe/ideas/articles/2008/11/16/depression_2009_what_would_it_look_like/?page=full
Depression 2009: What would it look like?
January 15th, 2009 at 1:52 pm
I may be right. The funds should go in hard that 820 was supported.
January 15th, 2009 at 1:54 pm
This should be the exit point from the bear market and a start to recovery. Be back in 6 weeks to find out if it’s so.
January 15th, 2009 at 2:06 pm
What is going on in the markets? I am not near a TV right now. Is there any reason for the run-up in the last hour?
January 15th, 2009 at 2:10 pm
@Calvin J
John Borcher just backed up his truck!
January 15th, 2009 at 2:23 pm
JB,
You are a brave soul. No way that XLF is getting any of my money.
What are people making of this market action? I thought we were going to get killed today given all the news after hours last night, I’ll be the first to admit it. Right now I look dead wrong.
AT where are you? Love to see what you think, does this change your idea about wave 5?
January 15th, 2009 at 2:39 pm
ben22
Take your pick:
1. It is a mirage
2. Man in the Middle – fudging the ticker
3. John B has very big truck
4. Obama rally
I agree I would love to see AT’s thoughts. Moves like these prove I know nothing.
January 15th, 2009 at 2:42 pm
PPT
January 15th, 2009 at 2:42 pm
5. Program trading. 8,000 on the DOW was key support level where many buys were automatically triggered.
January 15th, 2009 at 2:47 pm
Headline on Yahoo Finance:
“Stocks Regain Ground as Hopes Grow for Bailout- AP
Wall Street recovered from a sharp early drop Thursday as investors worrying about a revival of the banking crisis grew optimistic that the government will again help the financial industry.”
Is this not the very definition of throwing good money after bad?!
HCF
January 15th, 2009 at 2:47 pm
6. stimulating package of love from Congress
7. rollercoaster fans are running the show
January 15th, 2009 at 2:52 pm
So the only time the market rallies these days is on hopes for more bailouts. Just wonderful. What a farce.
January 15th, 2009 at 2:57 pm
Mannwich,
exactly, I was looking to see if there was news, there was none. The only half decent news was JPM this morning but if you listened to the presentation the outlook was exactly bright.
I don’t think we are going to get that big leg down until this summer but it is coming, like it or not.
January 15th, 2009 at 2:58 pm
wasn’t exactly bright I meant to say, I need to start proof reading my posts.
January 15th, 2009 at 3:16 pm
Not the strongest of reversals if you ask me, but probably enough to get some shorts covered
January 15th, 2009 at 3:25 pm
8. Steve Jobs was cloned
January 15th, 2009 at 3:37 pm
Mex: Watch the $. If the Euro rallies tomorrow the rally will continue.
JB is right nine times a day, mind you he makes calls 100 times a day…
We love you, JB, but be careful with those big banks, dude, the common is worth zilch….
January 15th, 2009 at 4:11 pm
I was getting out getting fingerprinted for the Texas Bar application when this thread went up. Was going to leave a message saying that was a useless sell signal because no one here would own any BAC. Guess I was wrong.
Who knows, JB. OB may have a secret plan to take out and break up CITI and BAC, selling off the useable parts to people who can actually run a bank. I think it would do wonders for the markets, but play hell with XLF.
Someone was worried about his brokerage account at Merrill. If you have cash and it’s not in an IRA, there’s no reason to keep it there. You can get better rates on CD’s and other cash accounts by shopping http://www.bankrate.com
January 15th, 2009 at 8:36 pm
LB: I will check the $ tomorrow, good luck to you guys.
January 16th, 2009 at 1:59 am
I probably missed a memo but it seems nobody is seriously considering the move down from 9K to 8K was a correction from the run-up starting ~end-November?
It took ~6 weeks to get up to 9K but only ~8 days to drop back to 8K. Doesn’t such a ratio make it “feel” like a counter move?
Suggesting that re-capturing ~25% of the 2008 peak-to-trough was the first phase of re-capturing, say, 50%? (So a peak at ~10.5K?)
Any oddsmakers in the house?