1 Stock to Buy, 1 Stock to Short: Banks

These two big-name bankers offer two very different ways to play the space

   

All day I scan the charts looking for technical patterns to trade, both to the long and short sides. My Trending123 Pattern Scan powered by Recognia is one useful tool I have to scan the markets quickly, and it is showing two technical events in these bank stocks for traders to take advantage of.

Buy the Bullish Continuation Diamond

4 17 13 bac 300x190 1 Stock to Buy, 1 Stock to Short: Banks
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Bank of America
(NYSE:BAC) just reported yesterday, and it’s developed an intermediate-term continuation diamond pattern over the past 64 days.

The price has broken upward out of a consolidation period, suggesting a continuation of the prior uptrend. The pattern begins during a downtrend as prices create higher highs and lower lows in a broadening pattern. Then the trading range gradually narrows after the highs peak and the lows start trending upward. When the price breaks upward out of the diamond’s boundary lines, it marks the resumption of the prior uptrend.

Recommendation: Buy BAC for a $14.00 – $14.40 target, with an $11.47 stop.

Short the Diamond Top

4 17 13 mtb 300x193 1 Stock to Buy, 1 Stock to Short: Banks
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M&T Bank Corp.
(NYSE:MTB) has developed a diamond top pattern over the past 122 days.

The price seems to have reached a top, showing signs of reversal as it has broken downward after a period of uncertainty or consolidation. The diamond top pattern begins during an uptrend as prices create higher highs and lower lows in a broadening pattern. Then the trading range gradually narrows after the highs peak and the lows start trending upward. When the price breaks downward out of the diamonds boundary lines, it marks a significant reversal to a new downtrend.

Recommendation: Short MTB for a $91.00 – $93.00 target, with a $104.57 stop.

InvestorPlace advisor John Lansing tracks the charts all day and offers expert technical analysis in his day trading, options and trading services: Power Trading at the OpenParabolic Options and Trending123.  Trending123 members receive access to the Trending123 Pattern Scan powered by Recognia free as part of their membership. For more information on which service is for you click here.


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