Schaeffer's Trading Floor Blog

Sector Check-Up: Homebuilders Getting Stronger; Big Banks Looking a Little Scary

Regional banks like USB and CMA are intriguing, but C and MS aren't for the faint of heart

by 5/2/2012 2:07 PM
Stocks quoted in this article:

I have been going over a lot of filters and screens during the past couple of days to narrow down my watch lists, and getting rid of names that no longer look appealing. It seems like we have been stuck in a trading-range type environment for the past couple of months, but I wanted to share a few observations after digging through a ton of charts this week.

  1. I'm starting to see a lot of retail names and apparel names that look good, but I'm having a tough time finding anything on the short side to pair them with.
  2. Homebuilders are looking stronger and stronger every day. They had a midday pop today, and many are trading near multi-year highs. If you aren't in them already, it's a little tough to enter right here… there's still a lot of skepticism toward the builders, though.
  3. Some of the building materials stocks also look decent, if you don't want to jump on the homebuilders directly. Owens Corning (OC) is one stock that stood out to me.
  4. I continue to see regional banks that have solid chart set-ups, while larger financial firms don't look so hot. Names like U.S. Bancorp (USB), Comerica (CMA), and Northern Trust (NTRS) all look intriguing, while Citigroup (C) and Morgan Stanley (MS) scare me a little bit right here.
  5. Coal stocks also kind of scare me. In particular, Peabody Energy (BTU) looks vulnerable right here.

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