Banks Continue to Perform Poorly
Jun
8
Written by:
6/8/2008 8:10 PM
Banks Continue to Perform Poorly
Friday’s
action confirmed the S&P correction which was signaled two days prior and
the DOW Industrials sell signal that occurred over a week ago. And the weak
sector of the economy is the same sector that began a correction last year, the
Financials. Banks showed continued weakness last week with four banks making
new 52-week lows on Friday, National City (NCC), Washington Mutual (WM), Wachovia
(WB), and Fifth Third Bancorp (FITB). For a short term play, National City looks attractive for a short position.
National
City declined 7.5% on Friday to reach a new low for
the last 52 weeks of 4.95 a share. Analysts have reduced their expectations on
NCC earnings over the past 90 days from a 0.35 cent profit to a 0.12 cent loss
for the current quarter. The stock has declining revenue in the quarter
compared to last year of 50%. 18% of the shares in float are short at this time
and a continued weak market should lead to additional price pressure on the
stock.
The markets
have signaled a correction and the banks and financials are showing the most
weakness at this time. Being short the banks and especially National City should be a profitable trade
for the short term.