Today all the talk is about the financial reform bill getting ironed out in Washington. While the specifics are really unknown the financial stocks are bouncing higher this morning. Recently the financial stocks have been crushed and under a lot of pressure. Therefore, any resolution would cause a relief rally in the financial sector temporarily.
This morning Goldman Sachs Group Inc (NYSE:GS) is trading higher by 2.10 to $137.07. This stock has been under severe pressure since mid-April when the SEC accused them of fraud. While the stock is oversold it is still very weak technically on the charts. Therefore, any gains in this stock may just be temporary. However, when Goldman Sachs Group rallies the market will often rally higher. This stock is truly a stock market barometer. The next important support level for Goldman Sachs is $129.00, and $124.00.
J.P. Morgan Chase & Co (NYSE:JPM) is trading higher this morning by 0.64 to $38.70. This stock has sold off sharply since mid-April when it was trading around $48.00. The stock made a low on June 8th at $36.55. Therefore, as long as it holds above the recent low it is possible to bounce higher. Should the stock breakdown after the financial regulation news that would be a sign of weakness and a possible break of the lows would be likely.
Bank of America Corp (NYSE:BAC) is trading higher this morning 0.22 to $15.24. This stock has been very weak since mid-April. The $15.00 area is an important support level for this stock to hold and trade above. A close below the June 7th low could send this stock sharply lower. As for now it is holding up and should be respected.
The financial stocks are catching a bid today after the financial reform bill comes closer to a reality. This move higher today is still not that impressive at this stage. A possible reason for the disappointing action is because the financial reform bill did not address Fannie Mae and Freddie Mac. These two mortgage giants are responsible for many of the current problems in the economy and the government.
Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com
