Don’t Bank On The Banks!

Feb 23rd, 2009 – Comment

Gabe  from North York, Ontario writes about bank stocks: Hi Lou, Love the program on AM640, I listen without fail. I am wondering what you think about the timing on getting into bank stocks ie. TD, BMO etc. Have they bottomed? Hi Gabe, That’s the Nine Trillion Dollar question!  But the charts are fairly clear […]


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Better Than Most But In a Poor Sector

Gabe  from North York, Ontario writes about bank stocks:

Hi Lou, Love the program on AM640, I listen without fail. I am wondering what you think about the timing on getting into bank stocks ie. TD, BMO etc. Have they bottomed?

Hi Gabe, That’s the Nine Trillion Dollar question!  But the charts are fairly clear that the sector is under pressure globally and even though the Canadian Banks have been the paragons of virtue in this mess they are being judged by the company that they keep.

No Indication Of A Reversal

No Indication Of A Reversal

Lets look at TD Bank first. Even though Ed Clark steered the ship clear of the subprime mortgage iceberg and even gave $3M in compensation to charity those efforts have not made up for the fact that the financial sector with few exceptions is in a downward spiral. The MACD isn’t indicating a turn and the stock melted through support at $40. Trend is down and until signs of a recovery in the global financial sector are sighted its best to preserve captial than chase a stock to the bottom. Some might be tempted by the dividend yield of 7.3% but that might prove cold comfort at lower prices and higher yields.

Say It Aint So BMO

Say It Aint So BMO

Bank of Montreal is in a similar sell off with no indication of a reversal in the trend. It couldn’t hold onto support at $45 then could hold on to the ledge at $30. Again the yield on BMO is 11.4% which in a normal cycle would be a screaming signal to back up the truck and load up. But this is far from a normal cycle. BMO reports its quarterly results on March the 3rd while TD reports on February 25. The charts of the other Canadian banks are pretty much the same. Make it a great day and happy capitalism!

Categories: Banks
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