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That is probably a naughty expression and is probably not all that funny considering the banks have caused a lot of heart ache of late for many. In any case we do not ‘wager’, we make decisions based on calculated risks.
But what I am asking is: Is it time to relook at banks after what has been a retracement of over 62% from low to high and back down again?
Let’s go to the chart for the Financial sector – XFJ – which is dominated by the big banks:
click chart for more detail
This is the chart that best represents my view and I can assure you I have not hunted high and low for a chart that suits my argument. My argument follows what the chart offers.
The Elliott chart suggests a retracement up in April/May or thereabouts followed by – yes – another tanking. Yes, still bad news further out. Don’t ask me what that bad news is. I could postulate and add to the mountains of subjective verbage on the subject but it would help little.
Regardless of what the reasons may be behind the suggested move I can say from my coal face experience that the likelihood of the above pattern unfurling is high – very high. We know things can change as each day breaks and more data is added but all that may change is the extent of the rally, the depth of the fall and the timing.
Great – more volatility. Hone your shorting (yes another dirty word in some circles) skills as there is fun to be had and money to be made!
Enjoy the ride
Tom Scollon
Chief Analyst
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