In what many investors are calling the worst single day trading session over the last three weeks, the banking sector was preparing for even more bad news. Moody's is in the process of downgrading the US banking sector as whole, which could very well affect both after-hours trading and Friday's trading session. That being said, these five banks need to be examined more closely, as potential buying opportunities could occur over the next few sessions.
Bank of America (BAC) - One of the five US banks to have its ratings cut by Moody's on Thursday, shares were trading down almost 3.4% at around $7.82/share, making the stock somewhat attractive at these levels. Currently trading in a 52-week range of $4.92/share and $11.25/share, Bank of America looks as though it wasn't hit terribly hard by the downgrade. Moody's gave BAC a 1-notch which was in line with what analysts had expected. That being said, I think BAC has a little ways to go before potential investors establish a position. If the stock drops another 4% - 10%, I would then begin to establish a small position, and any drop greater than 10% I would take full advantage of by establishing a medium-sized position.
Citigroup (C) - One of the five US banks to have its ratings cut by Moody's on Thursday, shares were trading down almost 3.6% at around $27.83/share, making the stock somewhat attractive at these levels. Currently trading at in a 52-week range of $21.40/share and $43.06/share, Citigroup looks as though it was hit terribly hard by the downgrade. Moody's gave C a 2-notch hit which was worse than what analysts had expected. That being said, I think C has a little ways to go before investors should establish a position. If the stock drops another 3% - 5%, I would then begin to establish a small position, and any drop greater than 8.5% I would take full advantage of by establishing a medium sized position.
JPMorgan (JPM) - One of the five US banks to have its ratings cut by Moody's on Thursday, shares were trading down almost 2.5% at around $35.51/share, making the stock somewhat less attractive at these levels. Currently trading at in a 52-week range of $27.85/share and $46.49/share, JPMorgan looks as though it was hit terribly hard by the downgrade. Moody's gave JPM a 2-notch hit which was worse than what analysts had expected. That being said, I think JPM has a little ways to go before investors should establish a moderate position. If the stock drops another 3% - 5%, I would then begin to establish a small position, and any drop greater than 7.5% I would take full advantage of by establishing a medium sized position. If JPM can recover from the derivatives trading scandal that rocked the bank in recent weeks, it could potentially begin to trade once again in the $38/share - $41/share range.
Goldman Sachs (GS) - One of the five US banks to have its ratings cut by Moody's on Thursday, shares were trading down almost 2.65% at around $93.90/share, making the stock somewhat less attractive at these levels. Currently trading at in a 52-week range of $84.27/share and $139.25/share, Goldman Sachs looks as though it was hit somewhat hard by the downgrade. Moody's gave GS a 2-notch hit which was worse than what analysts had expected, and worse than many investors had anticipated. That being said, I think GS has a little ways to go before investors should establish a moderate position. If the stock drops another 4% or near $90/share, I would then begin to establish a small position, and any drop greater than 7.5% I would take full advantage of by establishing a medium sized position.
Morgan Stanley (MS) - One of the five US banks to have its ratings cut by Moody's on Thursday, shares were trading down almost 1.6% at around $13.96/share, making the stock somewhat attractive at these levels. Currently trading at in a 52-week range of $11.58/share and $24.46/share, Morgan Stanley looks as though it will be hit very hard as a result of the downgrade. Moody's is expected to give MS 3-notch hit which was much worse than what analysts had expected, and worse than many investors had anticipated. That being said, I think GS has a little ways to go before investors should establish a moderate position. If the stock drops another 10% or near $12.50/share, I would then begin to establish a small position, and any drop greater than 15% I would take full advantage of by establishing a medium sized position.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
