Bank Stock Posing Attractive Entry Point

The bank sector is taking a major beating today

Deputy Editor
Aug 15, 2023 at 2:08 PM
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Charles Schwab Corporation Common Stock (NYSE:SCHW) was last seen down 2.2% to trade at $60.43, as bank stocks take a hit following a dire warning. Specifically, Fitch Ratings warned that it may be forced to downgrade dozens of members of the U.S. banking sector, following its slashed assessment of the industry's health in June.

Today's pullback put SCHW back below the $64 level, which has served as a floor since mid-July; however, a historically bullish trendline is flashing on the charts that could help the equity regain some of its lost ground in the coming month. 

According to Schaeffer's Senior Quantitative Analyst Rocky White's latest study, Charles Schwab stock is within one standard deviation of its 40-day moving average. The equity has seen seven similar signals in the last three years, and was higher one month later 63% of the time, averaging a 5.8% gain. A move of similar magnitude would place SCHW near levels not seen since April.


SCHW Chart August 152023

An unwinding of options traders' pessimism could add some much-needed tailwinds. This is per Charles Schwab stock's Schaeffer's put/call open interest ratio (SOIR) that sits in the 86th percentile of readings from the past 12 months.

Those looking to get ahead of the curve should consider speculating with options. This is per SCHW's Schaeffer's Volatility Index (SVI) of 28% that ranks higher than just 5% of annual readings, indicating that volatility expectations are low right now -- a boon for premium buyers.


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