Bull Market Will End Without Big-Bank Leadership

TheStreet.com

NEW YORK (TheStreet) -- The last time I profiled all of the stocks in the PHLX KBW Banking Index was back on February 6, when I wrote, The 'Too Big to Fail' Banks Remain Buy Rated Post-Earnings referring to the Q4 2012 earnings season. On February 6 the number of buy rated stocks in the BKX declined to 13. Today there is only one, Citigroup Inc . Today I profile these 13 banks post Q1 2013 earnings.

The daily chart for BKX ($56.09) has been showing lower highs since setting a multi-year at $57.60 on March 15. The BKX traded as high as $58.81 back in April 2010. I show quarterly and semiannual value levels at $47.00 and $45.71 with weekly and monthly risky levels at $58.38 and $58.78. A close this week below the five-week modified moving average (MMA) at $55.75 shifts the weekly chart profile to negative. In my opinion, you cannot have a bull market in stocks with a bear market in the big banks.


Chart Courtesy of Thomson/Reuters

The finance sector is 16.4% overvalued with the BKX up 9.4% year-to-date lagging the S&P 500, which is up 11.0%. Among the 13 components of the BKX I profile today, 12 are above their 200-day simple moving averages, or SMA, which reflects the risk of a reversion to the mean. I rate the finance sector "underweight," with 67 buy-rated stocks and 232 sell-rated stocks in this important sector.



Reading the Table

OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level: Price at which to enter a GTC limit order to sell on strength.

Bank of America ($12.14 vs $11.88 on Feb 6) -- missed EPS estimates by three cents earning $0.20 per share on April 17. The weekly chart shifts to negative with a close this week below the five-week MMA at $12.06. My semiannual value level lags at $9.01 with a monthly risky level at $14.00.

Citigroup Inc ($45.87 vs $42.92 on Feb 6) -- beat EPS estimates by $0.11 earning $1.29 on April 15. The weekly chart profile stays positive with a close this week above the five-week MMA at $45.00. My annual value level is $33.19 with a monthly risky level at $51.61.

Fifth Third Bancorp ($16.75 vs $16.51 on Feb 6) -- beat EPS estimates by a nickel earning $0.44 on April 18, then set a multi-year high at $17.04 on April 30. The weekly chart profile stays positive with a close this week above its five-week MMA at $16.43. My monthly value level is $16.50 with a semiannual pivot at $16.87 and monthly risky level at $17.40.

Huntington Bancshares ($7.06 vs $7.12 on Feb 6) -- beat EPS estimates by a penny earning $0.17 on April 17. The weekly chart profile stays negative with a close this week below its five-week MMA at $7.15. My quarterly value level is $6.19 with a monthly pivot at $7.09 and weekly risky level at $7.47.

JP Morgan Chase ($48.01 vs $48.79 on Feb 6) -- beat EPS estimates by $0.21 earning $1.59 on April 12. The weekly chart shifts to negative given a close this week below its five-week MMA at $48.23. My semiannual value level is $46.82 with a weekly pivot at $48.51, and monthly risky level at $53.67.

KeyCorp ($9.88 vs $9.49 on Feb 6) -- beat EPS estimates by a penny earning $0.21 on April 18. The weekly chart profile shifts to negative given a close this week below its five-week MMA at $9.72. My annual value level is $7.87 with a monthly pivot at $9.87, and weekly risky level at $10.33.

M&T Bank ($99.54 vs $104.46 on Feb 6) -- beat EPS estimates by $0.12 earning $2.06 on April 15. The weekly chart profile stays negative with a close this week below its five-week MMA at $100.95. My quarterly value level is $90.11 with a weekly pivot at $100.54, and semiannual risky level at $105.62.

Regions Financial ($8.43 vs $7.93 on Feb 6) -- beat EPS estimates by three cents earning $$0.23 on April 23. The weekly chart stays positive with a close this week above the five-week MMA at $8.13. My monthly value level is $8.18 with a weekly risky level at $8.64.

SunTrust Banks ($28.94 vs $28.76 on Feb 6) -- beat EPS estimates by two cents earning $0.63 on April 19. The weekly chart profile stays positive with a close this week above the five-week MMA at $28.67. My annual value lags at $21.60 with a weekly pivot at $29.94 and monthly risky level at $31.33.

State Street ($57.47 vs $56.17 on Feb 6) -- beat EPS estimates by three cents earning $0.96 on April 19. The weekly chart profile shifts to negative given a close this week below the five-week MMA at $57.70. My annual value lags at $54.80 with a weekly pivot at $61.04 and monthly risky level at $62.01.

US Bancorp ($32.81 vs $33.13 on Feb 6) -- matched EPS estimates earning $0.73 on April 16. The weekly chart profile stays negative with a close this week below the five-week MMA at $33.31. My annual value level is $28.58 with a weekly pivot at $33.10 and quarterly risky level at $34.47.

Wells Fargo ($37.46 vs $34.85 on Feb 6) -- beat EPS estimates by a nickel earning $0.92 on April 12. The weekly chart profile stays positive with a close this week above the five-week MMA at $37.01. My monthly value level is $36.70 with a weekly risky level at $39.21.

Zions Bancorp ($24.18 vs $24.04 on Feb. 6) -- beat EPS estimates by a nine cents earning $0.48 on April 22. The weekly chart profile shifts to negative on a close this week below the five-week MMA at $24.22. My annual value level is $21.31 with a weekly pivot at $25.19 and monthly risky level at $26.37.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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