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Market Alert: Bank Stocks May Have Bottomed

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The bank stocks have been hammered throughout 2011. They may have finally bottomed. Banks are one of the poorest performing sectors of 2011. Goldman Sachs Group, Inc. (NYSE: GS) hit a high $175.34 in early 2011 before hitting its low today at $131.50. Wells Fargo & Company (NYSE: WFC) hit a high of $34.25 before tumbling to its low today of $26.37 and Bank of America Corporation (NYSE: BAC) hit a high of $15.31 before collapsing to its low of the day today at $11.08.

Overall, based on the charts and news, it appears the financial firms may have hit bottom. With new regulations, tighter oversight, lower profits and possible lawsuits in the billions, Goldman Sachs, Bank of America and Wells Fargo have all struggled. Just over the last two weeks, Goldman Sachs was trading sharply lower on the rumor that the bank would receive a subpoena over its part in the financial crisis. This subpoena finally arrived today with Goldman Sachs immediately spiking lower, hitting a major support at $131.50. At that point it reversed.

With so much bad news for the financial companies in 2011, they have been beaten with the ugly stick. However, with so much bad news, comes the light at the end of the tunnel. It appears based on the major support levels hit today on all bank stocks and the final subpoena to Goldman Sachs, a majority of the bad news is out or priced in. This spells a short term bottom in the stocks and a long opportunity. Look for these stocks to see upside over the next two weeks and maybe further.

Gareth Soloway InTheMoneyStocks.com

Posted-In: Technicals Markets Trading Ideas

 

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