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Well well wouldn’t you know it? The banks have finally declared an increase in provisions for write offs. Why has it taken so long? Were they expecting some miracle to suddenly take the credit and confidence crunch woes away?
But is all the bad news out? Well, Tom or Thomas derived from Didymus who was a disbeliever – says it is not all out yet. Don’t ask me what is still hidden but there is something. I cannot just put my finger on it.
But the technicals are telling me there are still some nasties ahead. Most of it is out but not all. Take a look at the Elliot chart for the Finance sector:
click chart for more detail
What we can see is a projected leg down to 4200 and even as low as 3600. I would give a probability of 60% to the former and about 40% to the latter.
Have a look at OBV (On Balance of Volume) which is a great measure of volume strength and direction. No-one is interested in banks. Would you want to buy a bank right now? Maybe soon but not right now. So all we see are sellers. Of course there needs to be buyers but we are fussy and we want to see bank stocks cheaper before we will cheer up and buy.
Bargains are ahead of us but not just yet.
Enjoy the ride
Tom Scollon
Chief Analyst
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