BALTIMORE ( Stockpickr) -- There's a major debate on Wall Street: Are major banks a bargain right now, or are they toxic investments that should be avoided like the plague? With earnings season underway, that debate is getting even more important.On the one hand, banks are trading at a discount right now. The bargain argument has been enough justification for names such as John Paulson, Steven Cohen, and Warren Buffett to pour billions into bank stocks lately (granted, Buffett's $5 billion stake in Bank of America ( BAC) isn't exactly a high-risk bet). >>5 Stocks Set to Soar off Bullish Earnings On the other hand, banks have a tenuous grasp on profitability right now. Fallout from mortgage issues in 2008 and 2009 continues to factor into earnings, and macro factors are threatening to pull the rug out from the free money banks have been carting in lately. The Fed is running out of options to stimulate the slowing economy. As a result, it's likely that its next step will be to increase the money supply by cutting interest rates on the mountain of excess reserves held by major U.S. banks. The result would effectively be an end to the risk-free spread banks have been enjoying -- one that forces banks to increase lending to consumers. Put simply, the macro risks involved are significant. At this point, it's impossible to declare a definite winner in the debate. The economic factors holding a gun to most major banks' heads still haven't completely played out. That said, with bank earnings hitting Wall Street this week, there are attractive technical trades to be made on these names. >>5 Rocket Stocks for Earnings Season From a technical perspective, the financial sector has shown some important signs of bottoming. That means that investors could be looking at a good opportunity to pick up shares for a short-term trade rather than a long-term, conviction buy. Remember, technical analysis is a way for investors to quantify qualitative factors, such as investor psychology, based on a stock's price action and trends. Once the domain of cloistered trading teams on Wall Street, technicals can help top traders make consistently profitable trades and can aid fundamental investors in better planning their stock execution. With that, here's a look at how to trade the earnings on five big banks this week.
Bank of America
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