Bank and financial service company stocks have had it tough these past few days and are tipped to face further declines.
As the declines further intensify, shares of Bank of America, and Citigroup have trended lower even as current trends link to the three banks falling more as the days roll ahead. The reason for the continuous pressure on the banking sector is due likely to a flattening of the yield curve, further indicating a possible pressure on the banks’ net interest margins. Since banks make money from borrowing in the short term and lending in the long term, when their yield curves grow flat, their profit spreads shrink.
The Head and Shoulders Pattern
Financial ETC curves are currently showing what looks to be the aptly called “head and shoulders” pattern. Technically known as the reversal pattern, it suggests that the ETF could face declines from its current standings at $26.15 to $24.25, representing a fall of almost 8%
The JP Morgan Situation
Piggybacking off the above, the banking giant’s shares are also in the very possible danger of falling by almost 10% if the trend of stock reversal continue. The share value appears to be heading towards a value of $94, which would be a manageable 4% decline of the decline stops and holds its uptrend line.
The Citigroup Situation
Strongly in play already is Citigroup’s uptrend line, as their stock steadily rests on the trend line with around $71.25. A shift lower in the line would likely send the share price plummeting 8% to $65.75.
The Bank of America Situation.
Considering everything, Bank of America seems to be the best positions because their shares have a sufficient space between the current price and the placement of the uptrend. Also important to note is that their stock recently came out from a multi-year resistance and this should provide ample support for the stock process and avoid dramatic declines.