Financial stocks-heading up or just a sucker's rally?

Question

BAC went up almost 10% today. Is this the beginning of a rally in financials? Oil also dropped today for the second day in a row. Is this the beginning of a huge drop in oil?

Answer 1

I don't know if the rally in financials is sustainable. Still too many questions surrounding this sub-prime mess. But as far as oil, current prices are not sustainable. If they stay this high, demand will further decline, economies will slow, alternatives will come online all of which will eventually drive oil and gas prices down. Long term oil prices will go up, but a fair price for oil right now is probably more likely to be $80-$90. I guess we'll all see.

Answer 2

Relative to next years expected earnings many of the financials are undervalued.  Any good news is going to add confidence.  I think with today's strong up move, tomorrow will see a pull back, but the trend should be gradually upward.  On oil, ditto to the first poster.

Answer 3

Looks like the market bottomed on Monday with oil dropping 3.00 per barrel on Monday and another 5.00 today.

The financials are OVERDUE for a "Short Covering Rally"

Watch the 200 day moving average to get out if you decide to buy.

All the professionals traders will be watching the 200 day moving average on these stocks for another opportunity to sell them up there.

Answer 4

lower oil prices? No way. This is a temporary corrections.

Financial rally could be very short-lived as more and more sub-prime loans ARMs will reset in next 2 years and financials will have more and more write-offs.

Answer 5

Rebound off of really low valuations, a year from now, everyone is going to saying I could have bought Citi at $16!!!