Citi’s massive run up this week has come to a screeching halt but will that derail the bank comeback that has led this market to new highs for the year?
That's the billion dollar question especially now that banks are the best performing sector of the S&P. Take a look:
Top 5 S&P Sectors, 1 Month
Cons. Disc.: 10%
Is the sector overbought? Or is there still time to hop on this trade?
Instant Insights with the Fast Money traders
For the past 7 months the Bank ETF has been stuck in a range between $14 and $15.50, explains Bill Strazzulo of Bell Curve .
If the XLF can break above $15.50, patterns in the chart suggest it could go to $16.75, he says. But if it can’t on the downside it could slide all the way down to $11.50.
If you want to play the space, I think the play is long large cap banks, says Steve Grasso of Stuart Frankel. They have excess capital and they've paid back the TARP. You can't say that about the regional banks.
I agree, echoes Patty Edwards of Storehouse. There’s a lot of deal chatter about big banks looking to take out a regional banks, she says, but don’t do fools work. What are the odds you get that right? I'm a value investor and I think it’s much smarter to get long JPMorgan or Goldman.
I’m seeing put buying in financials and huge put buying in Citi, says Scott Nations, but I don't think it's bearish as much as it's investors protecting their long positions.
BULL’S LAST GASP
Looking at the broader market, the S&P pared an earlier advance on Friday as investors grappled with mixed signals about the economic outlook.
What’s the trade?
I’m a seller in front of 1155 on the S&P, says Bill Strazzullo. I’m looking for 1125 and maybe even 1090.
The last time the S&P was this overbought it went from 1150 to 1050, says Scott Nations of NationsShares. Also the Vix is higher on a Friday. Both factors are bearish and I’m a seller.
I’m a buyer, counters Steve Grasso.