Are you ready for bank earnings? We have been all over the mega-cap money center banks since mid to late August.
Since ChartLabPro.com first initiated a Buy reading on August 24
based on our proprietary algorithm, this is how the banks have performed:
Bank of America (NYSE:BAC) is up 10.30%.
JPMorgan (NYSE:JPM) is up 7.08%.
Citigroup (NYSE:C) is up 9.57%.
Wells Fargo (NYSE:WFC) is up 5.92%.
Goldman Sachs (NYSE:GS) is up 3.22%.
So the million dollar question is: What should you do ahead of earnings? Well, that all depends on your objective. If you’re a swing trader and have owned these names since August 24, we would not risk these gains and reduce exposure. As traders, we never go into earnings with a directional bet, which is just guessing. Long-term investors who have owned these names for several months can stay the course. There is no reason to own more than one of these names. Over the last several years, these names perform well into earnings, gap up on earnings, and then sell off. If you are looking for exposure after JPMorgan reports, go with the higher beta name, which is Bank of America.
These stocks all have the same correlation and provide very little out performance (see the correlation graph below). All of these names are currently rated a Strong Buy (5 Rating). Even though Goldman Sachs is technically a bank (yes, it has a bank charter, we know), it trades with the group. At the end of this article, we have also listed the strongest financials based on our algorithm for your consideration.
Bank of America
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No positions in stocks mentioned.
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