This Day On The Street
Continue to site
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

Why Bank Shares Are a Problem for the Stock Market

NEW YORK (TheStreet) -- Major banks are under the scrutiny of Attorney General Eric Holder, who recently warned on the Department of Justice Web site, "There is no such thing as too big to jail." This warning obviously includes the four "too big to fail" money center banks that are in the KBW Banking Index.

We crunched the numbers for all 24 components of the banking index before earnings in "Crunching the Numbers on Bank Earnings Season: JP Morgan, Wells Fargo, Citi."

Looking at today's second table below, only nine of the banks in the index beat analysts' earnings per share estimates, while three matched estimates and 12 missed. This table also shows that as of Tuesday's market close, 23 of 24 of the bank stocks have traded lower since April 9. They have been led by Bank of America (BAC - Get Report) ($14.73), down 11.4%; Fifth Third Bank (FITB) ($20.28), down 10.3%; and JPMorgan Chase (JPM - Get Report) ($53.34), down 10%.

Citigroup (C) ($46.36) is down 1.7% since April 9, and Wells Fargo (WFC) ($49.09) is down just a penny.

Must Read: Alibaba IPO Filing Indicates Yahoo! Undervalued:

We often have said that you cannot have a bull market for stocks with the major banks in a bear market, and the weekly chart for the banking index ($67.13) is now negative, with the five-week modified moving average at $69.01. When you look at the first table, please note that 22 of the 24 regional banks are below their five-week MMAs. Also note that 20 have declining 12x3x3 weekly slow stochastics.

Here are updated profiles for the four "too big to fail" money center banks that are likely on Eric Holder's short list of being "not to big to jail."

Bank of America ($14.73, down 11% since April 9) is trading below its 200-day simple moving average at $15.50. Its May 6 low at $14.72 is a new low for 2014. The weekly chart is negative with the five-week modified moving average at $15.89. The downside risk is to its 200-week SMA at $11.47.

Citigroup ($46.36, down 1.7% since April 9) has been below its 200-day SMA at $49.99 since March 26 but is above its April 11 intraday low at $45.18. The weekly chart is neutral with the five-week MMA at $47.61 with rising 12x3x3 weekly slow stochastics. This usually means that weakness should hold its 200-week SMA at $40.49. This week's value level is $45.59 with semiannual and quarterly risky levels at $48.06 and $49.61, respectively.

JPMorgan Chase ($53.34, down 10% since April 9) broke below its 200-day SMA at $55.59 on Monday, setting a new 2014 intraday low at $53.32 on May 6. The weekly chart is negative with its five-week MMA at $56.09. Semiannual and annual value levels are $51.64 and $49.59, respectively, with quarterly and monthly risky levels at $54.47 and $61.42, respectively.

Wells Fargo ($49.09, down a penny since April 9) set an all-time intraday high at $49.97 on March 21. The weekly chart shifts to neutral given a close this week below its five-week MMA at $48.65 as the bank's 12x3x3 weekly slow stochastic is declining. Quarterly and semiannual value levels are $47.33 and $42.32, respectively, with a weekly pivot at $49.96 and monthly risky level at $50.97.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $12.95 0.00%
JPM $57.75 0.00%
AAPL $94.02 0.00%
FB $104.07 0.00%
GOOG $683.57 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs