Bank Run Up : Buyer Beware

[Indiana Oracle]

If you are participating in the bank stock run ups such as BAC, WFC, pull your stops up.

Volume is suspect, Goldman appears to be driving the whole thing, the rest of the market is not following. This has every appearance of a trap to prop up the balance sheets of these banks ahead of further asset right downs.

 

[RodISHI]

More creative accounting?

I'm waiting for the IRS to nail CITI and WF for all those erroneous 1099's they use to buffer their tax liability and their actual losses.

 

[stekim]

If you are participating in the bank stock run ups such as BAC, WFC, pull your stops up.

Volume is suspect, Goldman appears to be driving the whole thing, the rest of the market is not following. This has every appearance of a trap to prop up the balance sheets of these banks ahead of further asset right downs.

That post made no sense. A bank's stock price does not impact its balance sheet unless it's selling shares to raise money. Which none of them are currently doing. Jeez.

 

[Toro]

I have no idea if the market is about to roll over or not. However, financials have been going up on huge volume. And it is not just the banks that are going up. It is also technology, consumer, materials and industrials. Over 90% of the stocks are above their 40-day moving average, or at least they were yesterday. That has only happened seven times before, all occurring during the 1991 and 2003 bottoms.

Banks have fallen 85% from their highs a few years ago, on par with the declines during the Great Depression. However, 75% of all banks in the United States were profitable last year and are expected to be profitable this year. Was it wise to buy or sell during the Great Depression after stocks had fallen 85%? You are betting against history if you are betting against the banks here.

 

[Indiana Oracle]

Then stay in them and leave your stops distant. Be my guest.

 

[Annie]

More creative accounting?

I'm waiting for the IRS to nail CITI and WF for all those erroneous 1099's they use to buffer their tax liability and their actual losses.

Yep, I posted this like 2 weeks ago:

Banks Plan To Buy Toxic Assets From Each Other

Banks Plan To Bid Up Each Other's Toxic Assets With Taxpayer Money (GS, MS, BAC, C)
Joe Weisenthal|Apr. 2, 2009, 10:10 PM|32

We told you this was coming.
FT has learned that the major US banks, Citigroup (C), Goldman Sachs (GS), Morgan Stanley (MS) and JP Morgan (JPM) are all interested in buying toxic assets from one another, using the massive leverage provided by Tim Geithner's public private investment partnership.

This was a possibility folks saw coming from the first day, and amazingly, Sheila Bair has said she's open to this kind of money laundering.

And let's be honest, that's exactly what it is. Banks buying assets from each other to inflate their books has nothing to do with "price discovery" or any such nonsense. It's all about using taxpayer money to create bids that are higher than what the market currently prices those assets at. And if it turns out those bids were too high and the cash flows never materialize then, oh well, it's the taxpayer left holding the bag....