Financial Stocks Still Clouded By Lawsuits and Regulation

Financial stocks still have a dark cloud over them due to the continued litigation threat and looming financial regulation. Stocks like Goldman Sachs Group, Inc. GS, JPMorgan Chase & Co. JPM, Wells Fargo & Company WFC and Morgan Stanley MS are mixed on the day as the markets hover around the flat line. The key here is to get the financial regulation behind them. As long as it hangs over the sector, these are likely to have trouble rallying in a major way. Chart wise, all these are just off their recent lows. Goldman Sachs has pushed up into the 20 moving average on the daily and is seeing a pull back from yesterday continue today. Support remains the recent low of $131.00. If that breaks, $125.00 would be sure to follow. If Goldman can break through the 20 moving average on the upside, this could soar quickly to $145.00. However, bottom line is getting this financial regulation over. JPMorgan Chase has a much more solid chart on the daily. The stock pushed through the 20 moving average a few days ago and is holding above it. It is now consolidating in a slightly bullish manner. As long as JPM holds the 20ma, this has upside potential in the short term, though limited with financial regulation looming. First target could be up to the 50ma and gap fill at $40.75. Should it break back below the 20ma, watch out as a sharp fall down to $37.00 may occur. Wells Fargo and Morgan Stanley have similar charts to Goldman Sachs. Use the same thinking for these two as with Goldman Sachs. JPM chart wise is definitely the strongest but still has risks because of the financial overhaul coming down the pipe. For more guidance, education, swing trade alerts, videos and analysis, join the Research Center. Gareth Soloway Chief Market Strategist www.InTheMoneyStocks.com