Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Are You Chasing Bank Stocks: When To Buy

Published 12/01/2016, 01:24 PM
Updated 07/09/2023, 06:31 AM

Do Not Chase Here


One thing I don't EVER do, is, chasing stocks when it is soaring; there are many dumb sayings in the financial world, but this one is true, "do not chase stocks, ever!"

So this is where most traders have proclivities to chase for 'fear of missing out (FOMO)', but trust me, you are not going to miss out anything when this thing turns hard & fast, and it will.

I am not calling tops here, because, that, no one knows, and it may very well continue to grind higher.

But this is NOT the level for an entry unless you are day trading this.

Turn This Into A Great Setup


For my trading style, this could turn into a great setup possibly early next year looking at the weekly-charts below.

So let's be patient, and wait for the setup to play out, instead of chasing that high up here and lose sleep.

But what if it goes up forever and to the moon and never pullback?

Well, then, we let it go! =) But one thing we won't do is, chase it up here.

Extreme 'OverBought'


We are currently running on empty with extreme overbought ("sell zone") condition on our Relative Strength Index (RSI) indicator.

Again, this does NOT mean it's going to roll over right here, right now, especially this being a weekly-chart, it may take some time to resolve itself.

In the below charts, I have depicted possible level for an entry, but that may differ/varry depending on the situation in the next 1-2 months.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

What I would really focus on is the RSI level, I need that RSI to reset back down to oversold ("buy zone") condition, and it will, all in due time (I don't see it happening in this month though).

So I will be watching Financial Select Sector SPDR (NYSE:XLF), Bank of America Corporation (NYSE:BAC), Citigroup Inc (NYSE:C) for the next setup.

You will be glad that you patiently waited for the setup, when the fear grips in into the financial sector, that's when we will be buying.

*Study below charts and strategy it, and wait for the right moment. XLF Weekly-Chart with RSI

BAC Weekly-Chart with RSIC Weekly-Chart with RSI*Disclosure: I currently do not own any stocks/options on the depicted stocks on XLF BAC C

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.