Thinking about getting into the financial sector? Here are some stocks that work. (November 15, 2017)
DJUSBK XLF JPM BAC CBOE SCHW AMTD
Banks are up quite a bit since November but they kind of stalled and came back here on a pretty high volume move. This is what is concerning to me: This would be institutional dumping. The banking index ( INDEXDJX:DJUSBK ), traded 245 million shares that day. This is a big decline, this is institutional selling on the banks. And then we finally got this finding support right around 430.00 or so. Overall you look at this, the chart is going from lower left to upper right, we like that. We like stocks that are in the winners circle not the penalty box down here. Because when they hit highs they keep hitting more of them, that is just the way it works. So generally speaking for a longer-term investor, if you have a multi-month holding period then this is an okay time to be entering.
We will just look at a couple of them here. The XLF ( NYSEARCA:XLF ) looks a lot like the Banking Index ( INDEXDJX:DJUSBK ), right? It has more than banks though. It has MasterCard ( NYSE:MA ), Visa ( NYSE:V ), Travelers Insurance ( NYSE:TRV ), just a whole bunch of stuff. But if you want to buy all of them you look at this around the 50-day moving average, that works.
You can look at JPMorgan ( NYSE:JPM ), where Jamie Dimon is the worldwide authority on Bitcoin ( CURRENCY:BTC ), they have pulled back right at the 50-day moving average. Long-term trend, hey, what is not to like? Not at a perfect point. If you are a longer-term trader you would rather see it pull back to the 40-week or 200-day moving average, that would be down here in the low 90s. But this works if you want to start buying some stock.
Bank of America ( NYSE:BAC ) also works. On a weekly chart this looks really strong. This pullback, it is a healthy pullback. High volume, which again, tells you that there is some institutional selling. But overall with the banking stocks this stuff works. I think it works just fine but you have got to be willing to hold these things for a while. Dividends aren’t outstanding, less than 2 percent and between the low and the high is a 7 percent range so this again, it is not a trading stock that you buy here with the idea of selling at 5 percent higher. Just buy the stock, hang on and let it work.
Other things in the financial sector, CBOE ( NASDAQ:CBOE ). This is one of the stocks in our growth stock list. This is working really well. Strong fundamentals. Strong technicals. It works. Some of the other brokers are also working so this is not just a CBOE ( NASDAQ:CBOE ) play here.
Schwab ( NYSE:SCHW ) forming a nice consolidation for a couple months. I think you want to wait. I will just go ahead and set an alert right here to remind me. Check this out, I will remember what that is. I will set my price alert there on Schwab ( NYSE:SCHW ).
And then Ameritrade ( NASDAQ:AMTD ), same thing. I will just put an alert right here at around $51.00 or so. Then I can forget about these stocks so I am not tempted to trade them. I can wait until I see the stock actually breaking out before buying. By the way, on a stock like this, this is not an ideal pattern, it is kind of choppy. But if you are looking to get kind of an early start buy as close to the 50-day moving average as you can and then buy more when the stock starts moving on the way up.
Like I said, this isn’t a real great pattern here. Just because it is so choppy it reflects a lack of price agreement. There is not an agreement yet among buyers and sellers as far as where the fair market price of the stock is. That is why it swings back and forth. Once it settles down into more of a squeeze then that is a potential breakout. You have got to have the squeeze before the breakout. Otherwise, it is just a stock that is flopping all around.
Anyway, check out the financials; not really for trades but as entry points for longer-term investments.
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