Bank Stocks Focus: Barclays, HSBC, Lloyds Banking

The banking sector has frustrated and outraged in equal measure over recent years. From the moral hazard of saving those who had bet the farm on earning bonuses via casino banking, to the bonuses at loss making institutions to the Libor, PPI and FX rigging, there has apparently been no stone unturned in terms of the books being cooked. Still the game continues, with what few could argue is not a High Street cartel, one that is profitable enough for even the billions lost/borrowed in the aftermath of the financial crisis to be slowly made back. The business model of banking is still the worst of both worlds: not profitable enough to withstand the extremes of the economic cycle, but also not robust enough to lend to SMEs or avoid the trap of lending too much in the good times, and too little in the “bad times” when the best bargains are to be had.

However, it could be argued that the worst aspect of all for everyone (apart from the regulators) is the fines for offences – usually rigging, where multi million pound penalties are imposed. The main losers once again are the ordinary retail client. At some point soon one suspects there will be a backlash. Unfortunately, the sheer complexity of many of the alleged misdemeanours means that most of us simply roll our eyes rather than even think of pushing for a change in the way this “scam” regulatory protection racket operates.

We start off with the daily chart of Barclays (BARC) where it can be seen that the shares have made slow, but steady progress within a rising trend channel in place since July last year. Of particular interest is the way that since January the shares have remained wholly above the key 200 day moving average at 239p. This underlines the way that while there is no weekly close back below this feature one would be looking to the 2014 price channel top at 280p as the 1-2 month target here. This is especially the case while the May gap to the upside through the 50 day moving average at 256p remains in place as support.

It is interesting as far as the recent price action of HSBC (HSBA) has been concerned that the market appeared to like the idea of the world’s local bank leaving the UK, rather more than it staying. Nevertheless, it may be argued from a technical standpoint that at least while the shares remain above the 50 day moving average at 600p, the glass here is half full rather than half empty. While above the 50 day line on an end of day close basis the upside here for HSBC is seen as being a retest of turn of the month resistance at 650p plus over the next 4- 6 weeks.

Although not all shareholders may have appreciated the shotgun merger with HBOS in the wake of the financial crisis, it can be said that a return to normality and a dividend payout seems to mean that Lloyds Banking (LLOY) shares are returning to their former status of being the best of the High Street bunch from a fundamental perspective. Judging by the daily chart configuration it can be seen how progress has been maintained within a rising trend channel from the beginning of last year. This has it resistance line projection heading towards 100p. The message currently is that this is the expected 1-2 months target, especially while there is no end of day close back below the top of the latest gap at 86p.