Bank Stocks Are A Bargain After Stock Market Crash

Bank Stocks are a Bargain

The press is giving too much credence to the effect an interest rate hike would have on the markets and on the financial sector. First, the fact that the Fed has been debating whether or not to raise rates by a paltry meaningless 0.25 basis points speaks volumes. The Fed clearly understands that this recovery is nothing but smoke and mirrors, the main driving force behind being hot money. Ignore the yield curve; bank stocks are a bargain…… based on a long-term investment horizon.

Secondly, deflation is more of an issue than inflation. Take a look around you. You can start with Oil and go down the commodity ladder; copper, Iron ore, coal, etc., are all trading significantly off their highs. Instead of marching to the drumbeat of the naysayers, march to your drumbeat; opportunity could be in the air.

The long term look at the Once Mighty Citibank

The long-term chart looks terrible, and the stock appears to have made hardly any headway since 2008. One could state that Citibank has not made much headway because it is a rotten stock, but rather than bringing on a brief moment of satisfaction, it would change nothing. However, if you discard the lens of negativity and look at the chart unbiasedly, you might spot something many others are missing. We will look at this chart shortly. Are all the regional banks suffering like this? Logic dictates that there are strong players out there; take a look at the picture below.

PNC Bank, a competitor to Citibank, is holding up very well

PNC Bank appears to be thriving, trading well above its 2009 highs. Certainly, every major market crash proved to be nothing but opportunity knocking in disguise. If one understands the principles of mass psychology, then just by utilizing this tool, one could do rather well, provided you are patient and buy when there is panic and sell when the crowd is Euphoric. Don’t mistake bullish for Euphoric.
PNC is likely to test 72, with a possible overshoot of 67 before it attempts to challenge 100.00. As long as it does not close below 50 every month, the outlook will remain bullish.

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A closer look at Citibank

If we look at Citibank through the eyes of an observer, the picture looks entirely different. Bias can cloud one’s judgement, especially if one is listening to many of the talking heads posing as experts but who are better qualified for the post of B.S. Artist. An observer starts on the neutral ground and examines the data through an unbiased lens

While others might view the chart as disastrous, we see a potential opportunity. Notice the massive channel formation. The longer the channel formation, the stronger the breakout is when it finally occurs. The breakout will likely occur to the upside as it has pulled back so much from its highs. A monthly close above 63 will virtually guarantee a move to the 100 and 150 ranges.

Is it time to jump into bank stocks; are there any great plays out there right now?

If you are willing to take on some risk, now might not be a bad time to put the following strategies to use.

Suggested strategies for those willing to take on a bit of risk

There are two options in the Table

Banking Stocks strategy one

Wait for a pullback to roughly the 38.00 range and then purchase LEAPS; these are options that have more than one year of time on them.

Banking stocks Strategy two

Wait for a monthly breakout above 63.00 and then purchase leaps. The stock in question is Citibank. If you are looking for some of the strongest regional players, you could use the following technique on PNC, BKU, STI, JPM, etc.

Delightful read: Next Stock Market Crash Prediction: Unveiling Insights and Impacts