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awallejr (79.94)

Financials will still rise nearterm

Recs

5

June 11, 2009 – Comments (3) | RELATED TICKERS: BAC , C

I warned bears about April tending to be an up month.  And it was.  I urged people to play oil at least through May/June.  Oil was in low 40s at the time, it is now low 70s.  And I am again urging people to play financials ahead of the July earnings season.  See this link comment 3:

 http://caps.fool.com/Blogs/ViewPost.aspx?bpid=205252&t=01005379500309381001

It still isn't too late to even play the option trade I suggested for BAC, tho you may want to play the August 12s now since the stock has runup since I first suggested the 10s.  Also Jim Cramer's open tonight was on BAC so you might see a typical spike up.

Another play is selling to open C December 3 puts. You can catch .63 per option, putting your potential purchase price at 2.47 worse case should you get called.  But odds are you will be able to sell to close those puts at a nominal price.

3 Comments – Post Your Own

#1) On June 11, 2009 at 8:48 PM, Evlampius (< 20) wrote:

somehow i dont see it...im thinking banks are actually loosing money espeically underwriting/mortgages thinking they have no duration. And that Fed is going to buy them forever, Even though credit is not that tight, delinquencies are keep rising. How do you think are they going to make money?? Buy treasuries??  Their urge to repay the TARP money is coming not from profitability perspective, but from the unease of the top management who afraid of the government and afraid to be stripped from the bonuses.

Iam sorry i can't agree with you on that. I think Banks/bank models are are hurt.

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#2) On June 11, 2009 at 9:12 PM, StopLaughing (< 20) wrote:

Note: in the average Bull Market coming out of a recession (1930-2008) in 6 out of 8 recessions financials lead with returns of 15, 26, and 40 % at 3, 6, and 9 months.

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#3) On June 12, 2009 at 12:01 AM, awallejr (79.94) wrote:

Evlampius read my comment 3 in my link, it sets forth the reasons.  We already saw positive earnings off the 1st quarter.  2nd quarter is going to be way better, mainly because banks did a ton of refinancing, and at basically cost free prices to them.  While I think Ken Lewis as CEO of BAC should resign, the Merrill Lynch deal will prove a good one down the road.  The only problem is he killed all his existing shareholders by this strategic move.  He took a $50 stock to under $3 in hopes of maybe getting it back to $50 years from now.

However, for new shareholders this is a time to buy.

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