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Two Ways: Stress Test Parameters Come to Light


Strengthen your portfolio in good times and bad.

Stress test details were released today, which helped pave the way for a rally. According to Reuters, the 19 largest US banks will have to hold substantial amounts of capital above regulatory requirements in order to weather a potential worsening of the US economy.

The Federal Reserve outlined the parameters in a statement on its website today, and said the stress tests were done to evaluate losses and revenues, and to determine if banks had enough reserves to continue lending during more difficult environments.

"It is important to recognize that the assessment is a 'what if' exercise intended to help supervisors gauge the extent of additional capital needs across a range of potential economic outcomes," said the Fed.

The actual results will be posted on May 4.

See Professor Adam Warner's Financials Get Ready to Reverse Course.

From the Bull Pen: Bulls can look to Mosaic (MOS). Professor Ryan Krueger has been spot on with the agriculture sector, and the stock appears to have broken its downtrend. A sell stop can be set below the day's low.

From the Bear Cave: Minyan James Kostohryz pointed out on the Buzz the inadequacy of the Fed's release. The heavy action in the financials also seemed very suspicious today. Consider a downside play in the Financial ETF (XLF); a buy stop can be set above recent highs, near $11.30.

Enjoy the weekend, Minyans!

In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.

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No positions in stocks mentioned.

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