8 Reasons

by Larry Levin

Last week I wrote several times on the growing list of glaringly bad economic news. Although there was no economic data on Monday to write about, I did come across something similar but different: “8 Reasons Why Bank Stocks Are Getting Crushed Again” by Joe Weisenthal:

http://finance.yahoo.com/news/8-Reasons-Why-Bank-Stocks-Are-siliconalley-1121529294.html?x=0&.v=1
 
We mentioned earlier that financial stocks have been selling off at a vicious pace lately.
Here are a few reasons why:

• Fears of new legal actions at Goldman Sachs. A subpoena from the Manhattan DA may be the start of something much bigger.

• Ongoing writedowns: See BofA.

• Expectations of ongoing mortgage-related legal issues at BofA.

• The weakening recovery.

• Big-names are selling. David Tepper, a previously aggressive bull, has been paring back his exposure.

• Regulatory uncertainty. As WSJ notes, new Dodd-Frank derivatives rules are supposed to come into effect soon, but nobody knows how the regulations will be implemented.

• The recent Moody's warning, warning that the political climate was growing less hospitable towards future bailouts. BofA, Citi, and Wells Fargo were put on notice.

• Fears of more stringent capital requirements.

 

Trade Date: 6/6/11

E-Mini S&P Trades*

(before fees and commissions):

1. OTF buy @ 10:22am at 1294.25 = -0.50 & -1.00 (2 lot)
2. FT sell @ 2:43pm at 1288.25 = +1.00 & +3.00 (2 lot)
3.  Algorithm positions (8)
4.  "Reading the Tape" positions (3) ...combined Secret's, Algo, & "Reading the Tape" total... +11.25

Sign up as an AvidTrader Member to receive "The Technician" Value Area's each day. The market then has an 80% chance of filling the Value Area. Many traders familiar with the Value Area and the techniques that go along with it use it to help them decide what trades to do each day. Join and see how this technique can help you trade more successfully!