Gemini846 (91.33)

Shorting Financials Still?

June 16, 2008 – Comments (3) | RELATED TICKERS: NYB , AF

Broad based financial shorts are a bit risky for my blood right now. This isnt' to say that I havne't done so in the past, but I was really surprised to see most of my favorites list short bank stocks on Friday. (I guess they actually shorted them on Thursday if I got the notice on Friday).

Does the market really think that these stocks are overvalued or was this just an opportunity to use a poorly performing sector to glean points from a rally in the S&P?

This morning the first headline in my inbox is a research notice that "The Bear isnt over for Banks".

"Mounting recession, inflation, and credit quality concerns continue to weigh heavily on the banking sector, and the larger-cap cyclical stocks have proven to be particularly vulnerable to increased short activity as we go through the 2Q08 earnings preseason."

Hasn't the market already factored in the credit crunch, or is this just a response to the fed saying it's not cutting rates anymore?  The article recommended hedge bets in NYB and AF. NYB is up $5 YTD. AF has been a momentum trader's paradise, rallying up to 29 then back to 22 (so slightly up ytd but hardly a hedge bet).

Personally I am avoiding the financial sector for now (why my score has stabalized), but were I in, I think I'd be buying.

(Disclosure: I have no positions in any stocks mentioned).