Us bank stocks are poised for a massive breakout to the upside.  The stocks to benefit the most will be the ones that have been beaten up the worst and have the largest short positions out on.  None of these banks are going to fail now that the economic turn around is almost certain.  The KBE and BKX are poised right below the200MA pointing to a long term recovery from their beleaguered March lows.

 

The best of the financials that are well above their moving averages like GS, BAC and WFC have a short positions from 1 – 2.5% and will not see the gains (percentage wise) than the likes of the heavily shorted troubled banks.  Troubled financials like C, HBAN,and RF have abnormally large amounts of shorts on the companies ranging from 10– 22% with Citigroup being one of the highest shorted stocks with 21.8% of its floated being shorted.  Talk about a short squeeze being imminent on this company if not a hostile takeover of C’s terribly depreciated stock.  The value of its assets could be worth much more under another more well run name. 

 

The time to buy these beleaguered banks is now.   The KBE and BKX are poised to charge through their 200MA’s being led by the stocks that have been most devastated.  Now that it is certain what is happening in the financial system as well as the economy globally and domestically.  These banks will slowly return to appropriate values.   The best bets are the names that have not come off their bottoms yet as shorts will be covering over the coming months to more appropriate levels.  Below is a table of some selected US Financials.

 

 

Last

52week low

52week high

% of float shorted

Goldman Sachs: GS

$165.45

$47.41

$190.04

2.5%

Bank of America: BAC

$12.69

$2.53

$39.50

1.71%

Wells Fargo: WFC

$24.26

$7.80

$44.68

2.88%

Fifth Third Bancorp: FITB

$8.01

$1.01

$21.00

4.95%

Suntrust Banks: STI

$16.93

$6.00

$64.00

5.62%

Morgan Stanely: MS

$28.54

$6.71

$46.58

4.08%

Citigroup: C

$2.77

$0.97

$23.50

21.8%

Huntington Banc Shares: HBAN

$3.73

$1.00

$13.50

15.08%

Regions Financial: RF

$3.66

$2.35

$19.80

10.17%

 

 

KBEJULY09.jpg picture by WesternRookie

BKXJULY09.jpg picture by WesternRookie


As long as the USD continues to depreciate and the US economy turns around by getting to its roots, by selling more US products abroad to the world community and companies stop outsourcing. With a dramatic drop in thedollar, they should return home and employ more Americans again.  As long as the cheap dollar encourages foreigners to buy rock bottom American properties as vacation homes to help stabilize home prices and encourage new demand.  As longas the government continues to encourage good policy such as a relaxation of tax rules regarding foreign investment and treatment of capital gains, as long as rates stay low for the foreseeable future and market forces continue to come together and happen as they are…  The US is on the road to a fairly decent rebound in pretty quick succession.  Lead in full force by the US financials.