More bad news for financials: Moody’s Investors Services placed Bank of America (BAC), down 15% year-to-date, Citigroup (C), down 15.75% year-to-date and Wells Fargo (WFC), down 13% year-to-date, under review last week. Banks ratings were boosted following government bailouts, and now the agency will review whether “these ratings should be adjusted to remove this unusual uplift and include only pre-crisis levels of government support.”
And Financials Select Sector SPDR (XLF) is down close to 8% over the past three months (and BofA, Citi and Wells Fargo are among the fund’s top 5 holdings). Granted, the recent sell-off has left shares oversold (and financials are the most oversold sector), but I don’t look on that as any sort of buying opportunity. Trend lines signaled an intermediate sell earlier this month, and shares are in a clearly established downtrend. (Click charts to expand.)
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.