The KBW Nasdaq Bank Index (BKX) is one of those key sector benchmarks designed to track the performance of 24 leading bank stocks and thrifts that are publicly traded in the United States.
Click to Enlarge Located on the Nasdaq OMX PHLX (formerly the Philadelphia Stock Exchange), the BKX has climbed 1.9% for the week and is looking to advance further after consolidating throughout much of Tuesday’s session following a jump in early-morning trading, as seen in the adjacent chart.
Using the Technical Event Screener, Profit Scanner filtered for bullish banking opportunities using classic patterns with an active event in place. Despite the bullish nature of the BKX from the Feb. 11 low of $55.99 per share, it is surprising to only find six banking stocks that fit the basic parameters outlined above.
Of the six, there are three that really jumped off the screen as solid buy candidates.
Bank Stocks to Buy: Citigroup Inc (C)
Citigroup (C) is the proverbial elephant in the room on this short list. With over 230,000 employees and a market cap of $135 billion, Citi holds the second heaviest weighting (7.88%) in the KBW Banking Index, just behind Bank of America Corp (BAC) with a 9.24% weighting.
In the chart above, it may look like all hope is lost for Citi stock. While it has certainly been knocked around over the past year, Profit Scanner picked up on an intermediate-term bullish development with an event breakout to the upside from a “head and shoulders” bottom formation.
With prices going up through the rising neckline, we now expect shares to continue their trajectory to the $52.75 to $54.50 target price range where resistance is expected to be found.
If realized, this potential trade would see a 15.62% return on the conservative end, assuming a current price of $45.62 at the time of this writing.
Bank Stocks to Buy: Customers Bancorp Inc (CUBI)
Customers Bancorp (CUBI) has seen periods of volatility from time to time, but overall, this stock seems range-bound between $22 and $31 per share. And that’s how investors should approach this stock.
In the chart above, you’ll see what technical analysts refer to as a “double bottom” pattern. With the CUBI stock price failing to crack the lower range support floor on a second try earlier in April, bulls took it as a sign the bears were out of gas.
After breaking the horizontal neckline outlined in red, Profit Scanner immediately took the target price range up to the $28.30 to $29 area, where resistance will be tested and those on the long side are most likely to take some profits off the table.
If realized, long investors would see a 10.04% return on the conservative end, assuming a current price of $25.63 at the time of this writing.
Bank Stocks to Buy: Old National Bancorp (ONB)
Old National Bancorp (ONB) finds itself in a similar setup to the Citigroup play we looked at earlier. The only difference is that Citi has traded in a downward-sloping channel, whereas ONB was stuck in a horizontal channel until the floor fell out at the start of the year.
Investors must have felt that the downside action was “too far, too fast,” as a head-and-shoulders bottom formation developed, giving bulls an opportunity to grab shares at a discount.
Now that ONB stock price has broken above the slightly rising neckline on the chart above, Profit Scanner is calling for shares of ONB to reach a target price range of $14.10 to $14.50 in the intermediate term.
If realized, investors are looking at a 9.98% return on the conservative end, assuming a current price of $12.82 at the time of this writing.
Profit 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.
