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business newsTicker Shock: Three Reasons Why Bank Stocks Have Nowhere to Go But Down
Tuesday's top stories and stocks with potential to move.
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I’d love to hook a lie detector up to some of those guys.
Asian stocks were mixed. The Hang Seng was up 0.38%. Meanwhile, the Nikkei was down 1.62%. European stocks were in positive territory earlier this morning. And here in the US, we're currently trading higher.
Here's what I’m focused on this morning:
Bank of America (BAC)/Citigroup (C):
Everyone has been a wide-eyed optimist when it comes to the financials as of late. And why not? With the economy seemingly on the mend, it made sense to dabble in the banks. And there's been so much momentum, it’s difficult to ignore. But I think the run is overdone in the near term. In fact, there are 3 things that concern me right now:
1. Call me a loon, but Meredith Whitney’s comments on the floor of the exchange yesterday afternoon spooked me. And given her history, she’s hard to ignore. For what it's worth, I think the selling near the close was due to her comments.
2. I’m looking at Bank of America. It’s sitting at $12.94, yet it’s only expected to earn $0.43 a share this year. Meanwhile, Citi trades at $3.86, and it’s expected to lose a bunch of money this year. I’m not saying these guys can’t come back, and longer term, I certainly like Bank of America's chances. But in the near term, they may have gotten a bit ahead of themselves.
3. There appears to be a lack of a near-term catalyst on the horizon for the financials. I think in order to continue this momentum, something big would have to happen.
I’d look to make withdrawals and not deposits right now, if you know what I mean.
General Motors (GM): Remember the film Titanic? The scene that stood out to me the most was when the boat started to sink and they showed the rats heading for high ground. Did anyone happen to see reports that executives were unloading shares of the beleaguered automaker?
Hold the email, folks: Not to imply the executives at GM are rats, but why do you think they might be selling? Clearly, I can’t speak for them, but it’s not a good sign. Like my mother used to say: I’ll give you 3 guesses, but the first 2 don’t count.
I think it’s both funny and sad that there are still investors out there willing to roll the dice at $1 and change. I hate to say it, but this could be the last time I write about the company.
For previous takes on GM, see: Ticker Shock: Three Reasons Why Dish Network's Stock Could Get Strong Reception and GM Sputters on Cash Concerns.
One final thought: Anyone find it ironic that Ford (F) didn’t lean on Uncle Sam, and yet these guys are still going strong, comparatively?
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