This is the main reason why I don’t want to hold financials even though it’s so hard to resists with double digit daily percentage moves. I only played Financials till Mid April following technical indicators and believed nothing about their fundamentals. Especially with the change in mark-to-market accounting rules.
Too much uncertainty rests on these financials companies who got the TARP funds. Rules keeps on changing everyday, and I am not going to underestimate nor overestimate this stress tests. Prefer to just not touch it at all.
Now to the news:
From market watch, unnamed sources report that BAC needs an additional $34 billion dollars according to the results of the stress test.
That’s 48.9% of its current market cap of $69.39 billion or 300% more than initially expected of $10 billion. That’s seriously going to result in a huge sell off in the markets if these reports proof to be correct tomorrow. Futures are already pointing to a drop in the markets tomorrow with S&P pointing to a 1% decline.
The charts did look interesting as mentioned on my thoughts yesterday. But looks like this cup and handle pattern may fail.
Source: MarketWatch
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