Banking shares gave back their pre-Brexit gains after the US Labor Department announced a strong jobs report in July, with data showing an added 255,000 new jobs in the US economy, topping the 180,000 forecast by a wide margin.
Given a positive development, the SPDR S&P Bank ETF “scored a near-term technical breakout last Friday,” with the conclusions that the US banking sector is expected to take off.
Further, the technical analysis of the banking stocks could sent market players to trade with caution or closely watch for the trends to improve, while analysts are expecting the stock to rally.
Amid the SPDR S&P Bank ETF’s increase on Friday, analysts highlighted that even if the fund moved upward through resistance, the volume was not weighty, and a breakout was not essential as the moving average remained steady.
Apparently, the main focus of the session was the “rather strong chart resistance from the late-May/early-June highs, as the banking ETF peaked ahead of the Brexit vote,” according to reports.
In addition, market players are eyeing these stocks in order to break through the May-June resistance levels to wipe out all their post-Brexit concerns.
It was reported that shares of Bank of America Corp. has seen an increase and are currently testing their pre-Brexit gains.
BAC: One of the Cheapest Big Bank Stocks
S&P 500 reports suggest that there have been no bargains for market players right now, as lower interest rates, along with the economic uncertainty between Europe and China has sent the money to flow into the U.S. equities over the previous years, pulling the large-cap index to reach about 40% above its pre-crisis gain.
However, there were some group of stocks that did not made their way in the rally. Several reasons are currently weighing on the bank stocks, and many of the nation’s biggest banks continue to changed hands for significant discounts to their book values.
Bank of America and Citigroup are among the poster children of low bank stock valuations. The banking shares changed hands by about 37% below their individual book values, according to the most recent reports, which made them both as the cheapest bank stocks in the KBW Bank Index, which gauges stocks of 24 large U.S.- based lenders.
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