Buying Bank Stocks Now?

[30ashopper]

30ashopper,

Dow is up 106 and two weeks to go for end of 1st qtr. to see actual earnings, etc.

Harry Dent rally? Or, tanking? What are you thinkin? Thanks and cheers~~~~

I think this is a bear market rally, I think we will retest the lows from two weeks ago, and most likely, set new lows. Some individual stocks may not retest though, like MS, but others will set new lows so I think it's hit and miss if you're buying individual stocks. Sector ETFs for me are safer in a market like this but that's just my personal preference. Anything I'm currently in is setup with stops as a short term play only.

If you're on the sidelines and itching to get in because you feel you're missing out, I would say you might have missed the boat and should wait for things to roll over again. That's my personal take, I could be wrong, I'm not a professional trader. I don't know where this rally will end, tomorrow, next week, three weeks.. but I think everybody expects it to end at some point. Bear rallies tend to be pretty short, and when they flip over they do it with a vengance.

I keep going back to those dshort graphs for reference. See -

rallies in this bear market:
dshort.com: Bear Market Recoveries Since 1950 (click on "Now" up top)

the big picture:
http://dshort.com/charts/bears/four-bears-large.gif

That 840 level on the S&P is fast approaching.

One positive thing I'd say - the next big down trend (if it comes) might be a good entry point for some buy and hold long positions if your time frame is five to ten years or more. I'll probably do this myself if it's a "big time" low. Even if things tank lower down the road, who cares, you still get in on a bottom and set yourself up with dividends. Overall though this thing is going to go through a lot of phases and last a long time. We've got lots of time to watch how things go. The market will fluctuate a lot - we don't have to worry about missing out on a rally to 14,000 on the dow by sitting on the sidelines.

Anybody else have an opinion or two or three?

 

[traderx]

I think this is a bear market rally, I think we will retest the lows from two weeks ago, and most likely, set new lows. Some individual stocks may not retest though, like MS, but others will set new lows so I think it's hit and miss if you're buying individual stocks. Sector ETFs for me are safer in a market like this but that's just my personal preference. Anything I'm currently in is setup with stops as a short term play only.

If you're on the sidelines and itching to get in because you feel you're missing out, I would say you might have missed the boat and should wait for things to roll over again. That's my personal take, I could be wrong, I'm not a professional trader. I don't know where this rally will end, tomorrow, next week, three weeks.. but I think everybody expects it to end at some point. Bear rallies tend to be pretty short, and when they flip over they do it with a vengance.

I keep going back to those dshort graphs for reference. See -

rallies in this bear market:
dshort.com: Bear Market Recoveries Since 1950 (click on "Now" up top)

the big picture:
http://dshort.com/charts/bears/four-bears-large.gif

That 840 level on the S&P is fast approaching.

One positive thing I'd say - the next big down trend (if it comes) might be a good entry point for some buy and hold long positions if your time frame is five to ten years or more. I'll probably do this myself if it's a "big time" low. Even if things tank lower down the road, who cares, you still get in on a bottom and set yourself up with dividends. Overall though this thing is going to go through a lot of phases and last a long time. We've got lots of time to watch how things go. The market will fluctuate a lot - we don't have to worry about missing out on a rally to 14,000 on the dow by sitting on the sidelines.

Anybody else have an opinion or two or three?

I agree that we will retest the lows. I am also staying away from individual stocks and trading ETF's. Stock risk is huge in the current environment. The market has had some good news for several days - C turning things around, housing data and even inflation data may have been viewed positively because it goes against the conventional wisdom that we are in a deflationary cycle - but it likely will not last. Expect more bad news out of DEE-troit. The automakers have done little but spend our money. Fundamental changes do not seem to be in the works.

I talked to a friend who has had a thriving wholesale business for years. Yesterday he said that he is probably going to close his doors. Buying has fallen off the map. He sells items that are considered necessities but folks can find ways to do without or substitute other products. We may have just seen the tip of the iceberg on fundamental changes in our buying patterns. OTOH, Bernanke says we will be done with the recession late this year so who knows?

 

[traderx]

Maybe a good time to buy bonds...

Fed to buy up to $300B long-term Treasury bonds - Yahoo! Finance

WASHINGTON (AP) -- The Federal Reserve announced Wednesday it will spend up to $300 billion over the next six months to buy long-term government bonds, a new step aimed at lifting the country out of recession by lowering rates on mortgages and other consumer debt.
At the same time, the Fed left a key short-term bank lending rate at a record low of between zero and 0.25 percent. Economists predict the Fed will hold the rate in that zone for the rest of this year and for most -- if not all -- of next year.
Fed purchases should boost Treasury prices and drive down their rates. That would ripple through and lower rates on other kinds of debt. The last time the Fed set out to influence long-term interest rates was during the 1960s.
The Fed also said it will buy more mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac to help that battered market. The central bank will buy an additional $750 billion, bringing its total purchases of these securities to $1.25 trillion. It also will boost its purchase of Fannie and Freddie debt to $200 billion.
"This is not only going to keep mortgage rates low for a long period of time," said Greg McBride, a senior financial analyst at Bankrate.com. "The mere announcement may produce a honeymoon effect and bring mortgage rates down to even lower levels in the coming days."
In addition, the Fed said a $1 trillion program to jump-start consumer and small business lending could be expanded to include other financial assets.

 

[Lynnie]

mutuals, etf's and precious metals (which was strange today) make up mine right now. just not sure what to do over the next week or so.........or, ever

Thanks 30ashopper and traderx - you both always great comments/advice.

 

[30ashopper]

If you're looking for daily market analysis I can recommend Brian Shannon's daily market videos. His comments about the state of the market (over bought, over sold, etc.) are pretty spot on. Sometimes he talks about the short term trades he does with his mom's money - always very conservative and safe. The guy is very "even steven" unlike a guy like Cramer on CNBC.

AlphaTrends

 

[30ashopper]

I took profits today. This may have more leg to it but I'd rather get out earlier than too late. All in all, an eleven day rally representing a 25% gain is just astounding. The curve up looks to be rounding off a bit - it'll be interesting to see where this goes from here.

 

[Bobskunk]

Plodder

Well, I am destined to be a plodder. I watched BAC daily, and when it was below three, I was tempted. However, as has been pointed out by some of you, these stocks could have gone to nothing.

No day trading here, nor much deviation from what I have always done, which is to save, choose an allocation, and stick to it through thick and thin. Still, it's fun to daydream about having "doubled down" and made up my losses and them some.

Back to work. Only about 6752 days until that first social security check, and I get weekends and holidays off. Yee hah.

 

[Lynnie]

I took profits today. This may have more leg to it but I'd rather get out earlier than too late. All in all, an eleven day rally representing a 25% gain is just astounding. The curve up looks to be rounding off a bit - it'll be interesting to see where this goes from here.

Good for you - interesting day, today. Am wondering where our ceiling might be? I am not convinced it's $9,000, but maybe $8,000 or a little higher? Wouldn't that be nice??

Cheers~~~~~~~~~~;-)

 

[30ashopper]

Good for you - interesting day, today. Am wondering where our ceiling might be? I am not convinced it's $9,000, but maybe $8,000 or a little higher? Wouldn't that be nice??

Cheers~~~~~~~~~~;-)

I wish I knew the answer to that!

 

[goofer]

Investing is easy with the benefit of hindsight. ;-) Are we in a new bull mkt or is this still a rally in a bear mkt ? I am taking profits, which I almost forgot what they were , and selling SPY's to hedge part of my portfolio. Also selling May calls against certain long positions since premiums are still high. I think the rally may peak out at the 925- 935 range in the SPX. The only stock I am currently buying is Abbott Labs ( ABT ), which is a 5 star rated stock by S&P and is also a "dividend aristocrat", having raised the dividend for 25 straight years. BTW, the banks have been on fire especially yesterday after WFC's earnings forecast.....could be a trap though !!!