Financials Looking Overbought

Financial stocks have had a huge run up over the past 4 weeks. They have come off their 52 week lows and some have tripled in value.

While I do not believe that financial stocks are going back to their 52 week lows; I believe that financial stocks are due for a pullback. My first move for Friday is to pick up some shares of the UltraShort Financial ETF (SKF).

This ETF just hit a new 52 week low today of $85 and closed at $88. I think this is a good short term hedge against any pullback in bank stocks.

Comments

[Nathaniel C:]

Good Luck. I tried shorting the financials after they went up 60% in a few days and got killed. Financials are to volatile unless you are day trading.

Apr 03 01:46 AM

[guymar:]

Errr - graphs look tremendously indicisive in 5, 15, 60 minutes, and not good in the daily for SKF. I would certainly not take a position now other than in a tight stop day trading setup. Was rather planning to buy UYG (the ultra long financials)

Apr 03 06:24 AM

[ETFtrader:]

I am in total agreement with the first two posters. I have made a good chunk of change on SKF and other financial ETFs, but then I am primarily a day trader, and I watch my positions like a hawk.

Apr 03 09:49 AM

[Fitz919:]

ETFtrader is right, watch your positions like a hawk. This way you can trade each market movement switching back and forth between SKF and UYG. I find it best to never hold a position overnight.

With Mark to Market out of the way. Banks will mark up the value of toxic assets, and won't sell any of it in Geithner's public/private plan.
Geithner knew M2M easing would have this effect. Geithner's been blowing smoke since he got this job. The Banks will continue to be insolvent, and a combination of bank runs and shorting, will bring down the formerly "too big to fail" banks.

The economy is still deteriorating....there... banks are deteriorating. It's not rocket science.

Apr 04 12:04 AM

[dragonpaw:]

The only way to keep the big banks from failing is for the gov't to "sell" (i.e.give away ) the "toxic assets"(i.e. fraudulent over-leveraged derivatives) back to the same check-kiting schills that began this whole debacle. This will occur because of the financially incestuous relationships that exists between the dispersers ,the over-seers,and the hedge-fund flim-flam panderers. The gov't will conveniently guarantee this re-doubled fraud while the financially incompetent electorate nods on in apoplectic awe with their new-found visionary(read "Obama"). Barack will continue his apologetic reduction of America because we have only 5% of the world's population but 35% (and rapidly falling) of its wealth. In his own oft repeated words "this just is not fair." His idea of fairness will come in many forms, not the least of which will be our loss as a moral ,political, and financial beacon to the rest of free world. But then again the idea of a free world is no more than an imperialistic anachronism in the new trans-national vision that has so enraptured our new "anointed one". "After all it's only fair." Hope you can be quick enough to jump back and forth between SKF and UYG once the helter-skelter begins.We'll all become day-traders or Tibetan monks.

Apr 04 01:10 PM