A zak Mir banking stocks trio – barc, rbs & lloy
It would be rather pleasant to think that after some years in the saddle, so to speak, much of the learning game as far as the financial markets is done and dusted. The sunny uplands should eb adaily occurrence…However, from my own experience, it would appear that the more you learn, the more you realise that this is an ongoing process. Such a concept may be counter intuitive…
Logic might suggest that once you reach a critical mass in terms of knowledge then your calls on stocks and markets should become progressively more accurate. Well, as todays sweep of the three most popular banking plays underlines, it would appear that at least as far as this sector is concerned then we were placed here on earth not only to get educated, but keep on getting educated!
Taking Barclays (BARC) first and we have been looking at an interesting period in the recent past. This is said on the basis that we know the major support here is towards 250p – a zone which has held sway since the beginning of last year. What has been a standout in the post December period however have been both the gaps – the first one to the upside through 255p in December and the second one to the downside in January through 288p. These gaps could both have been followed successfully as buy and sell signals respectively for 20p plus moves in both directions. But it may be that the present set up is of the greater significance however. This is because Barclays has put in a major higher low above 260p, even after the latest sharp sell off for the FTSE 100. The implication is that at least while there is no end of day close back below the latest swing low at 261p we could be treated to a top of November price channel target as high as 303p – ahead of a possible breakout from the 2013 250p – 300p trading range.
Moving on to Lloyds Banking (LLOY), where apparently we are soon to be given an offer we can’t refuse in buying shares in the bank 7 which we already (partly) own! Genius on the Gov’ts part to fleece us twice! Anyways, the way that the consolidation of recent months has all occurred above the July gap top at 75p, and within a rising trend channel from that month based at this month’s 78p higher low,all points to this being a progressively more bullish situation. Indeed, the latest rebound was a narrow bear trap rebound from just below the 50 day moving average at 80.25p. The implication is that while there is no end of day close back below the 50 day line we should anticipate a 2013 price channel top target of 88p to be hit as soon as the end of next month.
Finally as far as RBS (RBS) is concerned, it is evident that we are looking at a rather more conventional recovery situation than that described for Barclays and Lloyds above. This is because we have witnessed a fourth narrow bear trap rebound from below the black 200 day moving average – currently at 334p – since the beginning of November. We are not expecting the need for a fifth such move. Instead, the technical view is that while there is no end of day close back below the floor of a rising trend channel from July at 329p the upside here could finally be towards a retest of the post September resistance zone at 380p plus on a 4-6 week timeframe. Only cautious traders would still be waiting on a momentum buy trigger such as an end of day close back above the 50 day moving average / RSI 50 versus 44 currently, before taking the plunge on the upside.
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