Trading Nation

Banks on the rise after major sell-off — why one money manager sees opportunity

Trading Nation: Bank stocks sell off after Fed comments

Banks were rebounding Friday.

The KBE bank ETF was up about 1%, a day after plummeting on concerns over lower rates for longer. The Federal Reserve projected on Wednesday that there would be no rate increases through at least 2022 -- a negative for bank profitability.

The group remains down 11% for the week. 

John Petrides, portfolio manager at Tocqueville Asset Management, calls the sell-off "overdone" with investors too concerned over risk. 

"Basically, since the financial crisis, the Federal Reserve has been stress testing the banks' balance sheet under very draconian scenarios — of a massive stock market sell-off, massive economic contraction, a sell-off in home prices, all these terrible situations — and pretty much since 2013, even under the stress tests, the banks have all passed. So why then do we have this massive concern on the balance sheet side?" Petrides said Thursday on CNBC's "Trading Nation." 

Banks have been among the hardest hit this year. The KBE ETF is down 31% in 2020. 

"I think at current valuations it makes sense to add here to the banks," said Petrides. 

Bill Baruch, president of Blue Line Capital, is not ready to jump into the financials until they pull back even more. 

"I wouldn't be a buyer broadly until about $21.50, and you're starting to see exhaustion there and the market is rolling over, signaling on the [moving average convergence divergence]. So I think there is farther to go," Baruch said during the same segment. 

The XLF financials ETF was trading at $31.77 on Friday morning. 

"However, if I were to pick a name, I like JPMorgan, I like it a lot. I like the leadership there, and it led to the upside last year, so that chart looks very similar. I would be patient waiting for about $90 in JPMorgan," said Baruch. 

 JPMorgan would need to decline 10% to reach Baruch's $90 target.