Thursday was perhaps the last day to get a bargain on some bank stocks. As of 5pm the official stress tests were out and all the major banks had conference calls. Out of the banks, I did get into (C) on a limit order at $3.70 for 1000 share and am long.

The reason I am long on (C) is the fact that they only need to raise $5billion in capital which will come from the conversion from preferred into common shares. This has been something many were expecting, only the priced stock was lower as worse expectations. Citigroup has until June to do this conversion, but will probably proceed immediately to fix the last cracks in this stock.

Right now, there is a short squeeze on the stock and this has been pushing the shorts out of the stock. Before the stress tests, you could invest in one bank and regardless of its situation, it would go up if any others would go up. Now, its back to fundamentals where individual banks need to be looked at and their certainty vs. uncertainty to raise the necessary capital.

Some banks like Fifth Third are selling portions of their company to raise capital instead of dilution of shares in order to raise the remaining capital its short.

Again, lots of news is coming out on the stress tests and this was what many were waiting for. (BAC) and (C) are both up strong on the after hours and it will be interesting to watch both stocks on Friday. One kink that could present itself on any rally is the jobless numbers which come out on Friday.

(AIG) was another stock that is worthy of watching. It has narrowed its loss in Q1 and could be positioned for a pop. Right now in after hours its running flat after being sharply higher and lower on the earnings news.

(PCX) was the coal stock I was mentioning this week. It was due for a pull back on profit taking and alas, it finally happened today. I got in for 1000 shares long term on this stock for $8.25. I was amazed at the pull back but glad to see it not break below $7. I have a stop loss in place for $7.99 incase there is any further pull back as I won’t be watching this stock too much since its my long portfolio.

Here is the market video summary for Thursday:

Friday Watch:
Economic Indicator:
7:00AM Canada Employment for April.
8:30AM Employment Report for April.
9:40AM U.S. Leading Inflation Indexes for April.
10:00AM Wholesale Inventories for March.
10:30AM Weekly Leading Index.

Earnings Watches:
Two big stocks to watch are (BRK.A) Berkshire and Toyota. Both are key in their respective sectors and could add insight on the direction and state of the economy.

I will be watching the bank stocks. If I can, I will add (AIG) to my holdings but nothing else looks to be of interest to me at the moment tonight. The Futures are point to a positive outlook Friday so it will be interesting to see how the indicators and stress results fit into the equation.

Happy Investing!

Aman, MBA

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Related posts:

  1. Stocks Bounce Back Thursday
  2. Wednesday Plays
  3. Thursday Wrap and Video on Short Squeeze