Thinking about buying this dip in the financials? Look at Morgan Stanley (MS) and the other majo..
Discussed in this article: Morgan Stanley ( $MS )
I want to look at the financial sector real quick. Morgan Stanley ( $MS Morgan Stanley ), they announced earnings this morning and they beat on the top line, meaning revenue, and the bottom line, meaning their stated earnings. What happened to the stock? It tanked more that five percent. This is a problem, you know they’re many reasons for that, their fixed income business is declining and this and that, duh. When there’s no income in the fixed income part that’s a problem.
Look, if you just zoom out, look at the XLF ( $XLF Financial Select Sector SPDR (ETF) ), this looks kind of toppy to me, still have higher high, we’re just looking like we may be getting a lower low in the next couple days, but you can’t really put a spike in this uptrend yet, but it is looking pretty toppy. So if we look at the other big brokers, Goldman Sachs ( $GS Goldman Sachs Group, Inc. ) has been leading this thing lower for a while, JP Morgan ( $JPM JPMorgan Chase & Co. ) the same thing.
So when you’ve got all of these, like the big three, trading in sync, that’s a problem. Another one, Citigroup ( $C Citigroup Inc. ), this is looking a little toppy as well. The thing that you’ve got to do on these trend lines is, you can draw them up like this and as soon as you get one that just does not come even anywhere close to tagging this trendline again, in other words confirming it, that’s a big problem. So you don’t always have to wait for a break of support in order to get bearish on a stock. All you really need to do is watch and see for a break or a non-confirmation of resistance. That’s what we’re seeing here in Citigroup ( $C Citigroup Inc. ). I think that’s a big tell as well as of course this with Morgan Stanley ( $MS Morgan Stanley ), Goldman Sachs ( $GS Goldman Sachs Group, Inc. ), JP Morgan ( $JPM JPMorgan Chase & Co. ).
So the bottom-line is these are not stocks that you want to own right now. Bank of America ( $BAC Bank of America Corp ), no thanks, Wells Fargo ( $WFC Wells Fargo & Co ), no thanks, you just don’t want to go there. Now you have to differentiate between a long and a short-term portfolio. When I say you don’t want to own these things, look, if you want to make money five or ten years from now, you’re going to make money on Bank of America ( $BAC Bank of America Corp ), you’re going to make money on some of these others because the general trend is up and you can’t trade your entire net worth, sorry you just can’t do it, you have to have some commitment to a long term.
What I’m talking about here today and just in general in my videos unless I’m talking about, and I do this on a fairly frequent basis on Stock Market Mentor, the yield hog portfolio, and that is these high yielding stocks that are intended to be held for years, through thick and thin, we don’t really care so much about the capitol gains or losses, we like the gains, we don’t like the losses, but what we care about is the money machine aspect. Are they still spitting out monthly sometimes but typically quarterly dividends? And if they are then let the price take care of itself, I just want the money I get for owning the stock. That’s a different thing, that’s more of a long-term perspective. But from a trading perspective these stocks all look like they’re all ready to go lower so I want you to avoid those.