Are Brokers Oversold (IAI)
The frustration of the financial sector revolves around the big banks. The perception issue is a bigger problem for some than their balance sheets. The media and Washington have done a great job of selling the public on the banks being the bad guys in the housing collapse. We all know those in Washington had nothing to do with this as the banking regulators were diligent in auditing the books and records of the lending practices. Fannie Mae and Ginnie Mae loans were squeaky clean as well. And let’s not forget those truth in lending documents those poor homeowners signed showing the rate of interest and terms of the loan. No, it was all the fault of the rich banks who took billions of dollars.
Aside from this issue the sector is struggling, but technically the brokers are looking ready for a short term bounce. A look at the chart of iShares Broker-Dealer Index ETF, IAI shows some support near the $27 level. The 20 day moving average is in play just overhead at $27.50. Technically the chart is set up for a bounce higher. I would look for a challenge of the November high near term. This presents a short term opportunity if you are willing to play the move. A break below the $27 mark would be the logical spot for a stop. Measure the risk reward relative to your risk tolerance.
The sector remains a challenge, but the oversold conditions poised for a bounce. Goldman Sachs, JP Morgan and Morgan Stanley are all oversold technically and they are the three largest components of the ETF. Take the time to look at charts of each and determine the best method of action if any for you. As with any investment have a defined strategy in place! Define the entry, exit and target prior to putting any money to work.
