By Nicholas Santiago on July 12th, 2010 10:33am Eastern Time
Last week the major market indexes staged a firecracker of a rally finishing up 5.00 percent for the week. While almost every sector participated in this move higher it was the financial stocks that helped lift the major indexes.
J.P. Morgan Chase & Co (NYSE: JPM) is considered the leading large major bank stock in the market. This stock traded as low as $35.16 on July 1st as the market was tumbling lower. J.P. Morgan Chase & Co is now trading as high $39.00 this morning. This is near term resistance for the stock as price is currently trading into the daily 50 moving average. This financial giant will also have very strong resistance around the $40.50 level in the near term.
The Bank of America Corp (NYSE:BAC) chart looks very similar to the J.P. Morgan Chase & Co chart. This stock also found a low on July 1st at $13.50 a share. This stock is now trading into it's daily 20 moving average at $15.12. While this area is minor resistance on the daily chart the stronger resistance levels for the stock will be around $15.75 and $16.25.
Morgan Stanley (NYSE:MS) has rallied over the past five trading days into it's daily 20 moving average. While this former leading investment bank turned bank holding company is trading at minor resistance the stronger resistance is a bit higher. The major daily resistance levels for Morgan Stanley is $26.00 and $27.00 in the near term. Should the major market indexes hold up these important resistance these levels should come into play.
The major financial stocks are still facing some headwinds as the financial reform bill gets finalized in Washington. However, it is important to remember that these large major banks can borrow money from the Federal Reserve at basically zero percent and trade, buy treasuries, and maintain their credit card businesses. Therefore, they really do not need to make loans to make money these days. While these leading financial stocks have rallied sharply off the lows their upside should be limited in the near term.
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