This past week has been one of
the more volatile and turbulent trading periods for the stock market
since early 2009. Money has flown right out of the stock market as the
problems in the European Union and the United States hit main street.
The problems are debt, debt, and more debt. There has been very little
done to correct these debt issues, except for creating more debt. The
stock market is now telling the world that simply increasing the debt is
not going to fix the problems facing the United Sates and Europe. It
can be argued that every bailout, whether it was the TARP bailout in the
U.S, or the recent EU bailouts in Greece, Ireland, and Portugal are
simply just more bailouts for banks. Eventually, the banks that hold all
of this bad debt will simply have to take the hit and write down the
loss. That has not yet occurred, however, it is getting closer to
reality everyday. In this week's report we shall examine three different
financial institutions that are likely to come under further selling
pressure due to holding bad debt.
Banco Santander SA (NYSE:STD) is a leading European bank that is based
in Madrid, Spain. This leading bank has been declining since January
2010 when the stock traded as high as $17.55 a share. On August 5, 2011
the stock traded down to its June 2010 low before closing at $9.39 a
share. This stock is in a very weak technical position trading below all
of the major daily chart moving averages. The only positive factors
that we can see for the stock at this time is that it is very extended
and oversold at the moment which typically leads to a move up. The stock
also has some daily chart support around the $9.00 level. It is
important to note, in this type of economic climate weak stocks can
easily break daily chart support levels. News out of Europe is being
released very often and this should make this stock very volatile for
weeks to come. Traders can watch for some daily chart support around the
$8.00 area. Should the stock rally from its current level, traders
should watch the $10.50 area as important resistance in the near term.
Deutsche Bank AG (NYSE:DB) is leading
bank based out of Frankfurt, Germany. Believe it or not, Germany has
been considered by most investors as the safe haven country in the
European Union. In any case, the Deutsche Bank stock topped out in
October 2009 at $84.93 a share. Since that time, the stock has been
making a series of lower highs on the weekly chart. On August 5, 2011
the stock closed at $48.20 a share after trading as low as $45.83 a
share. This leading European bank stock is also very extended and
oversold at the moment. Stocks with this type of pattern will usually
react and bounce to any positive news. Should that happen over the
weekend, traders can watch for resistance around the $55.00, and $57.50
levels. Should DB stock continue to decline the next important support
levels will around the $44.00, $40.50, and $37.75 areas. Watch these
levels closely, place them on your charts and trade them accordingly.
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Credit Suisse Group (NYSE:CS) is one of the leading banks based out of
Zurich, Switzerland. First, it is important to note that Switzerland is
not part of the European Union, however, the bank does have global
exposure, especially to most of Europe. This is another leading bank
that topped out in October 2009 at $60.00 a share. On August 5, 2011 the
stock closed at a new 52 week low at $31.58 a share. This stock is
really not very different from the other leading banks stocks on the
charts, it is oversold and extended to the downside on the daily chart
time frame. Should the European Union come out with some type of
band-aid fix for the European Union countries over the weekend this
stock could be a bounce candidate. Should the stock decline from here
traders should watch the $30.00, $27.00, $24.00, and $22.50 levels for
support. Should CS stock bounce higher from current levels traders can
watch for resistance around the $34.00, $36.00, and $39.00 levels. These
markets are extremely volatile at the moment and wide swings in both
directions are very possible. Note the key levels, play them with
tight stops and make money.
