June 05, 2012 at 09:26 AM EDT
Bank stocks are at a critical point!
Tuesday, June 5, 9:25 a.m. In a post back in April I showed you this chart under the title of ‘Banks Look Like Short Sale Candidates’. The S&P Bank Sector Index has now declined 13% from its April peak, leaving a potential long-term triple-top in place. But it has not dropped beneath the potential support [...]

Tuesday, June 5, 9:25 a.m.

In a post back in April I showed you this chart under the title of ‘Banks Look Like Short Sale Candidates’.

60512a

The S&P Bank Sector Index has now declined 13% from its April peak, leaving a potential long-term triple-top in place.

But it has not dropped beneath the potential support at its long-term 200-day m.a., putting it at a critical point.

On the short-term charts, it broke beneath its 50-day moving average about four weeks ago, leaving a short-term double-top in place. And the m.a. itself has now turned down for the first time in over a year.

60512c

But it is potentially short-term oversold. So, if you didn’t sell short at the top it might be smart at this point to wait and see if the potential support at the 200-day m.a. holds.

Speaking of banks:

Banks need to be split up!

This is an excerpt from Tom Keene’s interview of former SEC Chairman Arthur Levitt in the current issue of Bloomberg Business Week:

Keene: “How do you respond to the idea that the way to avoid complexity with the banks is to ask them to hold more capital and less leverage?”

Levitt: That is certainly a step in the right direction. But you cannot simply say banks need more capital without saying that maybe a better answer is to tone down these institutions, break them up, have them sell off certain divisions, change the level of their complexity. Without that, there simply is not enough capital to provide protection against the kind of events we have seen in recent weeks.

Keene: “I’ve been reading ‘Why Are There So Many Banking Crises?’ by economist Jean-Charles-Rochet. He says that politicians lack the courage to step up and get in the way of normal greed in finance. Where is the courage in our politicians to do this?”

Levitt: There is no courage. I don’t know of a single member of Congress who is willing to resist the seductions of money and campaign contributions and the kind of flattery that comes from those who have special interests.

Right on, Mr. Levitt. To read my newspaper column of May 18, click here: This Is Crazy! Bring Back Glass Steagall!- May 18, 2012

Non-subscribers: We have updated the sample issue of the newsletter to a more recent issue that you might find interesting. Click here to view it: Sample issue of Street Smart Report newsletter.

To read my weekend newspaper column ‘The Time Has Come Mr. Bernanke’ click here.

Subscribers to Street Smart Report: The new issue of the newsletter will available tomorrow in the subscribers’ area of the Street Smart Report website. Please also stay tuned to the hotline!

Yesterday in the U.S. Market.

A relatively quiet day after the turmoil of last week, and particularly Friday.

The Dow was up as much 18 points in the very early going, down as much as 83 points by mid-afternoon, and then recovered to close down only 17 points. The rest of the indexes ended mixed, the Nasdaq 100 the biggest winner, the DJ Transportation Avg the biggest loser. Volume has been picking up lately, unusual for the usually low volume summer months, with just over 0.8 billion shares traded on the NYSE yesterday.

The Dow closed down 17 points, or 0.1%. The S&P 500 closed unchanged (up 0.01%). The NYSE Composite closed down 0.1%. The Nasdaq closed up 0.5%. The Nasdaq 100 closed up 0.8%. The Russell 2000 closed down 0.02%. The DJ Transportation Avg. closed down 1.3%. The DJ Utilities Avg closed up 0.3%.

Gold closed down $6 an ounce at $1,618.

Oil closed up $.95 a barrel at $84.18.

The U.S. dollar etf UUP closed down 0.4%.

The U.S. Treasury bond etf TLT closed down 0.8%.

Yesterday in European Markets.

European markets were mixed yesterday. The London market was closed for a holiday. The German DAX closed down 1.2%. France’s CAC index closed up 0.2%.

Asian Markets plunged Sunday night but recovered some last night.

The Asia Dow plunged 2.1% Sunday night, and closed back up 1.2% last night.

Among individual markets last night:

Australia closed up 1.5%. China closed up 0.2%. Hong Kong closed  up 0.4%. India closed up 0.2%. Indonesia closed up 1.7%. Japan closed up 1.0%. Malaysia closed up 0.3%. New Zealand closed down 0.9%. South Korea closed up 1.0%. Singapore closed up 0.5%. Taiwan closed up 1.5%.

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Markets This Morning:

European markets are mixed this morning. London remains closed for the holiday. The German DAX continues to plunge, down 0.7% this morning. France’s CAC is up 0.8%.

Oil is down $.24 a barrel at $83.74.

Gold is down $2 an ounce at $1,616 an ounce.

This Morning in the U.S. Market:

This week will provide somewhat of a reprieve from potential market-moving economic reports. Only a few are due, including Factory Orders, the Fed’s Beige Book, and the ISM non-mfg Index. To see the full list and times for each release click here, and look at the left side of the page it takes you to.

Yesterday’s report was that Factory Orders fell 0.5% in April, versus the consensus forecast of economists for a rise of 0.1%.

This morning’s report will be the ISM non-mfg Index, which will be released at 10 a.m.

The pre-open indicators have been flat to somewhat negative.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being down 20 points or so in the early going, meaningless as to direction later.

Non-subscribers: We have updated the sample issue of the newsletter to a more recent issue that you might find interesting. Click here to view it: Sample issue of Street Smart Report newsletter.

To read my weekend newspaper column ‘The Time Has Come Mr. Bernanke’ click here.

Subscribers to Street Smart Report: The new issue of the newsletter will available tomorrow in the subscribers’ area of the Street Smart Report website. Please also stay tuned to the hotline!

I’ll be back with the next regular blog post on Thursday morning at 9:25 a.m.

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