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Money Center Banks taking some heat

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Some of the bigger money center banks are taking some heat to the downside this morning and this has been an area that I've had less than "bullish" comments on in the past couple of weeks. One thing I like about Q-charts is the ability to be able to identify a sector that is showing weakness, then try to zero in on a specific group of stocks in that sector that might be responsible for the strength or weakness of a particular sector. Here's a list of the Money Center Banks that traders should be aware of that might be contributing to some of the weakness we're seeing in the banking sector today.

Money Center Banks

If I'm looking to trade any of these stocks today to the downside, I like to stick with those that are showing weakness. I don't like trying to trade against a trend. At the same time, I'm looking at bond YIELDS and must realize that any shorting/putting of these stocks would take place just ahead of Fed meeting, but the MARKET is saying something here and right now it doesn't look good for this group. What traders need to be doing is identifying potential levels where selling/buying can be found.

Citigroup (NYSE:C) Chart - last eleven months

A quick look at Citigroup (NYSE:C) shows a relatively nice fit on our retracement bracket if we attach retracement from the highs found in August to the low dating back to June 2, 1999. Any short/put activity taken by traders here would be early so I'd only suggest shorting/putting half positions. A close below the $44.60 level should get a longs attention and perhaps turn him/her into a seller. Notice how the rally up under the 200-day MA back in February/March looks as if the longs were looking to get out and bearish traders were looking for up-ticks. If the MARKET is truly looking for a 75 basis point rate cut from Mr. Greenspan and doesn't get it, this stock might suffer the consequences.

Jeff Bailey
Senior Market Technician

Chemical Index today's strongest group

Today's best performing group is the S&P Chemical Index (CEX.X), up 3.48%. This could be to due to acquisition rumors of Du Pont(NYSE:DD), but the Chemical Index still has one of the better looking charts.

S&P Chemical Index (CEX.X) Chart - last seven months

The CEX has been in a nice up trend that has been tested, but not broken four times. While the 200-day moving average is still sloping down, rising prices and the 50-period moving average are trying to turn it up. Stocks in this group could continue to perform well in the current market conditions.

Stocks in the Chemical Index

All stocks in this group are performing well today, not just Du Pont. The stocks in the sector also offer a variety of chart patterns for various trading styles.

Jeffrey Canavan
Assistant Analyst

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