Dear readers, the Dow Jones index showed remarkable strength on Wednesday when it gained 188pts on high volume. The market has shown its hand. What had looked like a double top formation brewing a just a few days ago was banished aside by the bullish market. At the moment, it is trying to tell us that the market wants to go higher and the catalyst could be the banks (ok, this is a huge COULD). While the banks are not moving higher yet, the wave of selling could be over.
If the Dow had wanted to drop further, the banks could be the sector to lead them down. What's an economy recovery without the banks? While i am initially hesitant to place my long bets on the financials, the overall market sentiment have somehow convinced me to take this trade. The financials had lagged the overall market big time and if they could wake up from their slumber, this could be their time to steal the limelight by leading the overall market even higher.
Let's take a look at the stock of the supposedly weaker Bank of America (BAC). One thing that i could detect from this stock chart is that selling has subsided for BAC. Note the lower volume and the narrower price spread as of today. Trading hours are still on and do note that we have to wait for the closing for confirmation as we are using the daily charts. If the Dow Jones want to go higher, the financial sector could be the missing puzzle in this mystery.
FAS - Financial barometer: FAS is displaying strength at this moment as the stock had made a higher high after filling the gap yesterday. I was expecting this ETF to come back down after filling the gap but the price action of FAS showed strength and indicated that it wants to go higher at this moment. While it has yet to move back up the trend line which it fell through last week, perhaps things could be finally looking up for the financials. Is this their revival which all of us are waiting for? I say: go place your bets now!
Always trade with stop loss!
If the Dow had wanted to drop further, the banks could be the sector to lead them down. What's an economy recovery without the banks? While i am initially hesitant to place my long bets on the financials, the overall market sentiment have somehow convinced me to take this trade. The financials had lagged the overall market big time and if they could wake up from their slumber, this could be their time to steal the limelight by leading the overall market even higher.
Let's take a look at the stock of the supposedly weaker Bank of America (BAC). One thing that i could detect from this stock chart is that selling has subsided for BAC. Note the lower volume and the narrower price spread as of today. Trading hours are still on and do note that we have to wait for the closing for confirmation as we are using the daily charts. If the Dow Jones want to go higher, the financial sector could be the missing puzzle in this mystery.
FAS - Financial barometer: FAS is displaying strength at this moment as the stock had made a higher high after filling the gap yesterday. I was expecting this ETF to come back down after filling the gap but the price action of FAS showed strength and indicated that it wants to go higher at this moment. While it has yet to move back up the trend line which it fell through last week, perhaps things could be finally looking up for the financials. Is this their revival which all of us are waiting for? I say: go place your bets now!
Always trade with stop loss!
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