Financial Recovery? Time to Wait and See

In my previous post, I commented on Freddie (FRE), Fannie (FNM) and Lehman Brothers (LEH). Investors who were willing to accept my analysis at that time must have made good returns till this Friday. I think now is a good time to book your profits and exit the trades if you opened the positions in these stocks after my recommendation. At this point I would suggest that investors wait and watch for financials for 2-3 days as a new situation evolves. The results from big financial institutions have been above expectations, with the exception of Merill Lynch (MER). But we have to keep in mind that these expectations were drastically reduced in the past one or two months.

Though I still don't think that financials are in as bad situation as most analysts were proclaiming till Monday this week. And you should also keep in mind that now a few of the analysts are again finding financials attractive. But I would suggest investors wait and let the things evolve a little bit. First thing we want to make sure of is that this rally is not purely driven by short covering and there is some genuine interest in these stocks.

Enjoy your weekend.

Disclosure: None