Financial stocks have been the favorite punching bag of the shorts. And no expletive does the price action justice, especially if you’ve been long any of them as I have.
The problem is that no level of oversold seems to bring in enough strong hands to give it a reprieve. It seems that ever little bounce is just another chance for the shorts to pile on.
Things have gotten so bad that only 15.22% of the stocks in the sector have buy formations according to point and figure charting (as of yesterday’s close). To find things in similar disarray, we’d have to go back to early 2000 (14%) and late 1998 (11%).
Obviously, both of those were great buy points.
What gives more impetus to the argument now is that the banks and brokers are not the only stocks that are extremely oversold according to (bullish percent charts). Pretty much everything is - with the exception of energy. In fact, the last time the bullish percent indices for this many sectors were collectively this low was in mid August 2007.
For more information, follow this link to see how I use bullish percent charts to time the market.
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