3 Bearish Bank Stocks to Short: WFC, TLMR, STBZ

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This year has not been kind to financial stocks. The sector is down roughly 12%, making it one of the worst performing segments that make up the S&P 500 benchmark.

financial stocks to sell banksThis poor performance has been particularly troublesome when you consider the fact that financials have the second largest weighting in the index (15.87%) and are tied in various ways throughout the U.S. economy. With the underlying causes of the 2008 financial crisis still of concern today, it’s imperative that investors keep an eye on the sector as it has generally been a good barometer of investor sentiment.

That said, Profit Scanner is a nimble tool that can really help active traders who believe we are currently experiencing nothing more than a bear market “relief rally” and would like to take advantage of continued weakness in financials.

Within the Technical Event Screener, we’ll simply go to the advanced tab and choose our preferred industry. We can start with “banks” since they are a key component of the financial sector and most likely to come under intense selling pressures when the equity markets make another strong push to the downside.  Then, under date range, we can choose to screen “in the last two weeks” to help boost the number of results. Finally, in the event type menu option, we should check the box for classic patterns and be sure to filter for stocks that are bearish. Click search and you should be given a nice list of weak bank stocks to short.

With Profit Scanner’s easy-to-use screening tool we were able to find some excellent shorting opportunities. And the best part is that you never know what you’ll dig up. While some of the banks may be familiar, most should be off the radar.

Bank Stocks to Short: Wells Fargo (WFC)

The first bearish banking opportunity is Wells Fargo (WFC). This giant is currently down 11% year-to-date, hovering just above $48 per share, an improvement from when the shares traded as low as $46.88 back on Jan. 20.

In the chart below, Profit Scanner shows us the bearish event outline in red. We can see a breakdown from the weak bounce higher that formed a nice continuation “flagging” pattern. With shares now trading below the channel itself, the system has set an initial short-term bearish price target of $44.70 for the stock.

WFC-chart

Bank Stocks to Short: Talmer Bancorp (TLMR)

Our next bearish banking stock, Talmer Bancorp (TLMR) has formed what Profit Scanner refers to as a megaphone topping pattern. Outlined again in red, the pattern takes the shape of a “broadening” megaphone, as the name suggests, until a catalyst breaks the formation wide open.

When this event happens, shares can either surge much higher or collapse and trigger a selloff. In this case, shares of TLMR are pushing lower. And with that, the system is looking for shares to make their way back down to the $14.20 to $14.60 price range. If realized on the conservative end, a short play on TLMR would yield gains up to 8.5%.

TLMR-chart

Bank Stocks to Short: State Bank Financial (STBZ)

Lastly, we have State Bank Financial (STBZ). This bearish play takes advantage of the channel that the stock has been trapped in. Any attempts to push out of this trading zone have been quickly countered by convincing bearish activity.

In the chart below, we see price essentially giving up on the upper range of the channel, drifting now toward the other end. As such, the system is calling for a short-term move lower toward the $17.40 to $17.70 price range.

STBZ-chartProfit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.


Article printed from InvestorPlace Media, https://investorplace.com/2016/02/bank-stocks-wfc-tlmr-stbz/.

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