Is the Huge Decline in Banking Stocks Over?
Tradefair Weekly Update 
/ Editor / 04 August 2008 / Leave a comment
Buzzwords of the week; tip 6
A bar chart shows the range between the high and the low for each period as a vertical line, with two very small horizontal lines attached to it: on the left the opening price, and on the right the closing price.
Technical tip of the week
When using the Tradefair Spreads platform you can choose how you want
your price chart to look. Click on Settings, then in the pop up box go to Styles and click on the down arrow to see the options you can choose. Some people are content just to see closing prices, but the two most popular options are Candle Stick and Bar chart. They both show the same data, open, close, high and low, but many traders get used to and prefer one versus the other. You can see what they both look like at the end of this email.
Is the huge decline in banking stocks over, or is this just a short
respite?
After many years of easy credit and a banking system awash with cash the recent credit crunch has been headline news. The banks have found it increasingly hard and increasingly expensive to organise their own funding, and we have seen several turn to the stockmarket to raise additional funds. Bad debts have become an issue, and not many analysts are comfortable that we know the full extent of write offs from the sub prime and other lending crises. As a result the bank stocks have been hammered, particularly over the last three months.
Taking just one example, in mid April Barclays was at 500p and a minor uptrend seemed to be in place. By early May the price had fallen below a trendline drawn below the uptrend. You could have sold Barclays then at 450p. In mid July price closed above a trendline drawn above the new downtrend, and that was a good signal to close the bet. At that stage the price was around 300p, although at one point it had got down to below 250p. From 450p to 300p, a fall of 30% in just 2 months.
Since then there has been a rapid increase in price up to 350p. There are two schools of thought - the optimists suggest that the selling is over for now, the pessimists suggest that we are just seeing a short respite before the selling starts again.
With such huge price swings within just a few months, there have been plenty of trading opportunities for the nimble trader. The two trend lines referred to can be seen on these two charts of Barclays, the first one is a Candle Stick chart, the second one is a Bar chart.
To view graph one - Click here
To view graph two - Click here
Useful Links
Tradefair Spreads - financial news
Tradefair Spreads do not endorse or approve the content of these websites. The links provided are not related to Tradefair Spreads and are provided with no prejudice and responsibility by Tradefair Spreads.
The information in this email is for educational purposes only, it does not constitute advice and should not be construed as solicitations of any order to buy or sell. Past results are not necessarily indicative of future results.
