Trade of the Day: KeyCorp (KEY)

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Stocks advanced with a light-hearted swagger on Monday as investors began to buy into the idea that Greece will soon complete negotiations with its credit overlords in the eurozone on the extension of its bailout.

It seems like we have been at this juncture a hundred times in the past hundred weeks, only to see it unravel in the next few days. Investors want desperately to believe that both sides in this debate are rational and will reach a reasonable conclusion to avoid blowing each other up. But the history of this relationship actually provides very little hope that either side will cave in…unless it is truly the 59th minute of the 11th hour.

Ultimately, I think a deal will get done — but there really is no final deadline, no matter what they say on television. As the old saying goes, “The beatings will continue until morale improves.”

Meanwhile, it was a busy day of deal headlines, showing that we can at least depend on merger activity to rouse the animal spirits. Managed care dominated the headlines again, as Cigna Corporation (CI) rose 4.7% after rejecting a $184 per share cash-and-stock offer from Anthem Inc (ANTM). In addition, the Wall Street Journal reported that Aetna Inc (AET) made a bid for Humana Inc (HUM). And in the energy pipeline space, Williams Companies Inc (WMB) rose 26% after announcing it would look at strategic alternatives in the wake of rejecting an unsolicited all-stock takeover offer from rival Energy Transfer Equity LP (ETE), valued at $64 per share.

On the economic data front, U.S. existing home sales hit a 65-month high, increasing 5.1% month-over-month to a 5.35 million seasonally adjusted annual rate in May. Consensus expectations were for a 4.4% increase. This marked the highest level since the 5.4 million seen in November 2009, ahead of the expiration of the first-time-homebuyer tax credit.

Energy stocks led the way on Monday, followed by financials, and today’s trade is in the latter sector.

Trade of the Day: KeyCorp (KEY)

KeyCorp (KEY) is a $13 billion regional bank based in Cleveland that fell on very hard times during the great financial crisis of 2008 and has been recovering slowly ever since. Like any other regional bank, its fortunes improve when interest rates rise, allowing it to make more money on its loans to home and car buyers, and expanding businesses. Both the long-term and short-term charts also look great, and it is still cheap.

KEY shares rose 1.4% on Monday, which was great. This is a leading company, so it is getting the attention and respect it deserves. Buy KEY at $15.40 limit, good till canceled, for initial target $16.85 limit, good till canceled (set up to sell half there). The second and final target is $17.40 limit, good till canceled. Set a stop at $14.75, good after 11 a.m. ET only.

Jon Markman writes a daily trading newsletter, Trader’s Advantage, and CounterPoint Options, a service geared towards helping individual traders make steady, consistent profits with the VIX. Follow him on Twitter for his latest take on markets and innovation, and be sure to check out his Top Stock for 2015 here.


Article printed from InvestorPlace Media, https://investorplace.com/2015/06/regional-bank-trade-of-the-day-keycorp-key/.

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