NEW YORK (TheStreet)-- In the second half of January there was a wave of Q4 earnings results from the banks in the PHLX KBW Banking Index (BKX.X), and 12 of the 17 I profiled on Jan. 10 in Buy-Rated Big-Bank Stocks to Trade Pre-Earnings beat their EPS estimates.
Among the four that missed expectations, two were among the six that were downgraded according to www.ValuEngine.com. Two of the downgrades were to buy from strong buy, while the other four were downgrades to hold from buy. Today I update my buy-and-trade profiles for the stocks I selected from the BKX.
The daily chart for BKX ($54.90) is overbought with the 21-day, 50-day and 200-day simple moving averages at $53.73, $51.63 and $48.22. The BKX traded to a new 52-week high at $55.06 on Tuesday vs. its Feb. 15, 2011 high at $55.88, and its April 2010 high at $58.81. My semiannual and annual value levels lag at $47.58 and $45.62 with a monthly pivot at $54.85, which was tested on Tuesday. This week's risky level is $56.25.
Chart Courtesy of Thomson/Reuters The finance sector is 16.7% overvalued this morning with the banks-major regional industry just 1.1% overvalued. The "too big to fail" banks are in the major regional industry, and they continue to be among the best buy-and-trade stocks. On Jan. 10 we showed 11 of the 17 BKX stocks undervalued and today this number is down to 7. While 16 of 17 show double-digit gains of 16.3% to 52.3% over the last 12 months, the projected gains for the next 12 months is down to 3.9% to 9.6%. The 12 month s trailing price-to-earnings ratios are reasonable; three are single-digit and only one exceeds 20.0.
Reading the TableOV/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. On Jan. 4 I wrote 10 Themes for the New Millennium Teen Years and the third theme is that, "the upside for money center and regional banks will be limited in 2013. So far the BKX is up 3.1% in 2013.
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