AU Editorial: Surprise, Surprise
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August 1, 2008
Well, well… wouldn’t you know it? The banks have finally declared an increase in provisions for write-offs. Why has it taken so long? Were they expecting some miracle to suddenly take the credit and confidence crunch woes away?
But is all the bad news out? Well, Tom or Thomas, derived from Didymus, who was a disbeliever – says it is not all out yet. Don’t ask me what is still hidden but there is something. I just cannot put my finger on it.
But the technicals are telling me there are still some nasties ahead. Most of it is out but not all. Take a look at the Elliot chart for the Finance sector:
click here for more detail
What we can see is a projected leg down to 4200 and even as low as 3600. I would give a probability of 60% to the former and about 40% to the latter.
Have a look at OBV (On Balance of Volume), which is a great measure of volume strength and direction. No one is interested in banks. Would you want to buy a bank right now? Maybe soon, but not right now. So all we see are sellers. Of course, there needs to be buyers… but we are fussy and want to see bank stocks cheaper before we will cheer up and buy.
Bargains are ahead of us but not just yet.
Enjoy the ride
Tom Scollon
Chief Analyst
Trading Tutors Team
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