Potential position for October - LONG FAZOn a TA standpoint, it appears that we had an all time low on September 8 2016. Since then, we are having higher lows within some kind of triangle with good resistance at 33.11.
Slowstoch or RSI are not even close of indicating any direction as to what direction one should take this trade.
But I guess this post is more fundamentals based positioning than a TA one and relates to the upcoming October month and perhaps even further. Here are some reason why:
1- New Stress tests requirements that could force large financials institutions to raise capital requirements by 3 to 4 percent
2- Banks like Well FArgo and Deutche bank making headline could induce stress to investors with regards to Financials and this could lead to selloffs in financials related stocks
3- Low interest rates environment which put pressure on financials
4- Fintechs
5- Banks laying off employees in order to maintain revenues and dividends. (which proves that they are having difficulties to generate revenues)
6- US election and Trump candidacy could add more volatility to the market.
7- October is historically a volatile month.
Well one could make the point that all of the above is probably priced in the stocks already which I could agree. My opinion is that if it is the case, then I believe it acts as a lid to financials stock going higher because all of the above is very bearish . Therefor, that could reduce our risks by being short Financials. One has to take into account that all indexes are at all time highs, this is really a massive resistance upward which again reduce risk of a new rally short-term.
S&P 500 0.51% FORWARD P/E RATIOS:* FINANCIALS: 12.2 as of today.
This idea would not be targeted for an intraday trader but more for someone wanting to hold for days.
Bought FAZ -2.45% at 31.50 $ last Friday.
Your comments are welcome
