More than five years after the worst of the financial crisis there would appear to be “an element” of mistrust amongst the general public towards the banking sector and bankers. But there has been at least one positive take away from the heady days of 2007/2008 – an enrichment of the English language.
After all, we are now familiar with the concept of moral hazard, good and bad banks, bonus caps, and of course “bankstas.” That said, the latest bad bank news is somewhat demoralising. We have been told that of the £48.7bn owed by UK Asset Resolution, the state run zombie bank (zombie came from the Japanese bubble aftermath), £6.2bn has been paid back to the Government. So only another £42bn to go!
One wonders how many years rip off credit cards, four percent over base mortgages, services charges and zero interest on checking accounts it will take to clear that off? One also struggles to remember when we voted to set up a bad bank and why the losses were not written off, in the same way that the loss to the taxpayer has clearly been from floating Royal Mail (RMG) too cheaply?
But at least we can distract ourselves with the happier prospect of charting three of the big UK High Street banks.
Barclays (BARC)
I start off with Barclays (BARC) which is arguably the most sad of the three shares in terms of its price action in the recent past. Here it can be seen that there has been a mildly descending price channel in place on the daily chart since August. While this may merely be a consolidation ahead of a new bull run, as things stand the risk of a decline towards the floor of the channel at £2.25 remains.
At this stage only an end of day close back above the 20 day moving average at £2.47 would even begin to lead technical traders away from a sell into strength strategy over the near-term. But at least it can be said that risking around 5p, up to the 20 day line, in order to try and capture over three times that amount from the floor of the channel, seems to be a reasonable risk / reward proposition.
Lloyds Banking (LLOY)
As far as Lloyds Banking (LLOY) is concerned it would appear that we are awash with decent technical news. This is over and above the party atmosphere induced by the imminent IPO of its TSB offshoot. While one doubts that the bank that used to like to say “Yes” will be anything remotely resembling a challenger player in the sector, a boost for Lloyds Banking shares appears to be on the cards.
This is said in the wake of an extended 2013 wide rising trend channel, and the way that an unfilled gap to the upside in August through 70p remains in place. The implication of the unfilled gap is strong upward momentum, with the latest clearance of the 200 day moving average at 77p underlining this idea.
The view now is that at least while there is no end of day close back below the 50 day moving average at 75p we could be treated to a 2 to 3 month target here as high as the 2013 price channel top at 95p. Only cautious traders would wait on an end of day close above the May resistance through 80p before assuming the big target here, and chasing it.
RBS (RBS)
Speaking of unfilled gaps to the upside, and this feature on the daily chart of RBS (RBS) is arguably the big near-term driver for the price action. The charting angle at the moment is that at least while the gap remains unfilled down to its floor at 310p we should be giving the benefit of the doubt to the buy argument.
Indeed, the impression now is that the stock is finding new support at the 200 day moving average line at 337p currently. The longer the shares can consolidate at and around this feature the greater the chance of an eventual move over the course of the summer to the top of the overall broadening triangle formation from November at 390p.
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