This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Bank on the Regionals

Editor's note: This piece originally ran earlier today on our newest Premium service, ETF Profits . Click here for a 14-day trial to this exciting product!

The past few days of weakness could be the beginning of a larger correction. Only time will tell if that's the case. For now, however, the selling appears to be an event-related shakeout courtesy of the toppling of some Middle East dictatorships. If the current weakness turns out to be just a shakeout (as opposed to a larger correction), then there could be some nice opportunities in store.

When panic sets in, people tend to sell first and ask questions later. Investors must then ask: was the selling reasonable? Were the stocks sold even impacted by the event that started the frenzy in the first place? After the dust settles and traders start looking for opportunities, the sectors with underlying demand should surface and show the strongest recoveries.

Regional banks might be one such group. Banks in general may be good candidates, and we could find reason to buy the money center banks as well. For now, however, we'll stick to banks that do not have international exposure (and therefore are theoretically insulated from overseas events). We aren't exactly sure why unrest in the Middle East would have triggered selling in these stocks. With no direct exposure to the Middle East, there's no reason for these stocks to be impacted by the unrest in that region.

The indirect impact of rising oil process could, at some point, slow the recovery. That, in turn, could impact the ability of these banks to lend or for borrowers to pay back loans. But it's a bit premature to worry about that scenario. Even if that was the rationale behind the selloff of these stocks, the reasoning seems to be based more on suspicion or fear than fact or probability.

As a group, regional bank stocks had been doing well in recent months, showing some strong advances. Many have reestablished their advances after a few months of consolidating price action. These rallies became somewhat extended as there were no intervening pullbacks. Until now. The broad-market selloff, which has impacted just about every stock and sector over the last three days, has finally provided an opportunity to establish long exposure in the regional banking sector with a reasonable risk-reward entry point.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs