Vikram Saxena

Monday Market Review: Bulls Back with a Vengence

Respirate: The area between 85 and 90 was strong resistance. It is likely to provide strong support and a good entry point with well defined stops.


On May 19 07:05 AM Respirate wrote:

> Vikram, if you can answer a question: What level are you looking
> at for an OIH trade? $86-87?
>
> I agree that 'Services' is the sweet spot in the oil sector. It's
> easily outpaced the S&P in recent months and may be expensive
> in the short term.
> Thanks -- R

Uneasy Silence About Regional Banks

What I wanted to highlight was the complete black out about the regionals. Given Team Obama's media savvy, I would like to see some proof before I jump in.

The note about preferred is from the WSJ article. I am including the relevant excerpts below.
Quote WSJ:
"In addition, it isn't clear what happens to hobbled regional banks that could have a hard time finding extra capital. Many are facing a deluge of bad loans to finance residential and commercial properties.

Regions, based in Birmingham, Ala., is among a handful of the tested banks without any privately held preferred shares that it could convert into common stock to boost its capital buffer, according to Deutsche Bank. That leaves it with a narrow range of options beyond turning to the government for aid."

On May 07 11:02 AM greedcanbgood wrote:

> "Many of these banks, especially Regions, do not have a large cushion
> of preferred capital to convert to common."
>
> Your analysis is incomplete unless you provide details. Otherwise,
> the reader is led to believe that all your regional listed are in
> the same boat and clearly, they are not.

Uneasy Silence About Regional Banks

1. I am sorry for the spelling error. This was done very late last night and Seeking Alpha's editor does not have a spell-check (or allow the built in checker of Chrome to highlight spelling mistakes).

2. Before the wireless revolution what you call the obscure was the more common idiomatic use of the word
www.thefreedictionary....


On May 07 10:36 AM Kenny Sullivan wrote:

> Ever hear of spell check? Poor spelling, poor grammar and an obscure,
> if not wrong, use of of the word tether are unprofessional. I began
> looking for errors in the article, rather than looking for content.
>
> Kenny Sullivan

Is Bank of America Poised for a Major Move Up?

Darvania:

I was intrigued by your comments so tried out a log scale. This following link shows how that looks on a 6 month and a zoomed in version (3 month).
screencast.com/t/0qxxa...

To me even the log graph clearly shows a W shaped double bottom on the right side of the cup. I have marked it with yellow lines. It is a stronger pattern since the second low was higher than the first low. In fact the log chart tends to de-emphasize the steep fall which would have worked against the pattern.

If you just consider the closing prices (third graph) we can see a V shaped. However this closing low was well (23%) above the intra-day low reached on the capitulation day which had much higher volume. Further the closing prices ignore the true range of the stock especially if the swings are made on high volume. Sure the base is very spiky but we are trading in very volatile times.

Trade smart and enjoy your gains.

Is Bank of America Poised for a Major Move Up?

Darvania:

The market has thrown out all rules during the past year. Further the scope of the market decline has matched some of the worst bear markets in history. As a result the ratios which may have worked well in the past can not be applied religiously here since the market is not behaving in a manner when those rules were developed and refined.

As I noted in my article, even if we accommodate for stretched ratios, the pattern is not perfect and has to be traded with a lot of caution. However, there is no denying that the 1st order metrics of the pattern, especially how the volume has behaved during different price periods are close to what Mr. O'Niel suggests (higher green volume bars, rising volume into right side, falling volume during the handle, high volume at capitulation low and breakout days etc.)

One aspect which I disagree with you quite strongly with you is your claim of a V shaped bottom. I see no V here; I do potentially see a W on the right side of the cup. I also would reiterate the fact that in a market with extreme moves like this, some of the basing action is bound to be more spiky and choppy than more normal times . However the handle over the past few weeks has been much better behaved, reflecting a gradual stabilization the market, which is also being reflected by the VIX.

This a period where disciplined traders can make money and BAC is one of the stocks with the potential to do so, as long as you are careful about when and where you enter the position and when you take your losses.

Bank of America: 'Paulson Plan Benefits Mostly Goldman, Morgan'

Mish:

Your interpretation of BAC comments is downright criminal. Just because GS/MS have been very aggressive in markdowns does not mean they will benefit the most. It is likely that in the reverse auction the price paid by the Fed will be closer to where the rest of the banks are marking the assets. Further MS/GS have little to no exposure to Sub-Prime; GS was short and MS took their hits an year ago.

Do you have anything constructive on how to fix the problem? All you do is shill for your asset management firm and spread FUD. The stock market wiped out close to $1.4T in value today, more than double of the $700B requested by Paulson to provide liquidity to the debt markets. You must be popping open the bubbly celebrating as Americans see their pension funds, IRAs and 401Ks get wiped out.