Beaten-Up Banks Eye Bounce

Battered financial stocks knocked the market lower again last week, prompting some traders and analysts to say Friday that the negativity in the sector got so strong, it may be time to start buying.

Many stocks, such as Goldman Sachs(GS Quote), Merrill Lynch(MER Quote), Morgan Stanley(MS Quote), Bear Stearns(BSC Quote) and Citigroup(C Quote), marched higher, as market-timers and contrarians tried to call a bottom in the sector.

That was after another week of credit-related writedowns, gloomy outlooks and warnings from the ratings agencies for big players in the lending industry.

Goldman, Morgan Stanley and Citigroup finished in positive territory, while others like Merrill Lynch and JPMorgan(JPM Quote) faded slightly by the end of the trading day.

"I've been negative on the financials for so long, now that everyone agrees with me, I am looking for a buy," says Punk Ziegel analyst Dick Bove. He says he hasn't decided yet which bank or broker is the best pick, but he's spending his days trying to differentiate among them.

Even as Bank of America(BAC Quote) said Friday in a regulatory filing that credit markets will "adversely impact" its fourth-quarter results, shares ended the day up 1.1%.

The market has been down this road before. Bear Stearns climbed more than 20% from its Aug. 15 low of $103.15 per share, before plunging back to a 52-week low of $93.50 during the day Friday. The stock closed at $96.91.