After a lower open, the market is trying to recover and is mixed as we head into the second half of trading. Tech has been weak but the Financial stocks have shown some strength following Friday’s pounding.
Earnings are winding down and this week Wall Street will focus on the Retailer sector as a number of high profile companies are expected to report. J.C. Penney (JCP, $38.03, down $0.31) got the ball rolling this morning and reported better-than-expected numbers although shares are slightly lower after opening near $41.
In economic news, the Empire State Manufacturing Survey for May came in at 11.9, which was well below estimates for a print of 18. This was nearly half the reading from April’s 21.7 posting and weighed on futures before the open.
Despite the headwinds, the Dow is up 20 points to 12,615 while the S&P 500 is higher by a point to 1,339. The Nasdaq is lower by 17 points to 2,811.
Although the Financial sector has lagged, now might be a good time to go bottom fishing. Bank of America (BAC, $11.99, up $0.06) broke below $12 a share on Friday and is on its way of testing its 52-week low of $10.91. At some point folks, this is a $20 stock but it might take a few years to get there. Most of the financial websites will list the “book value” of Bank of America at $20 which means shares are trading at half their book. However, we like to look at the “tangible” book value which for BofA is $12-$13.
The tangible book value is what shareholders can expect to receive if Bank of America goes bankrupt and its assets are liquidated. The higher the tangible book value, the better, as it provides shareholders with more insurance. At some point, the Financial stocks will bounce back but we are hoping shares of BofA can come down a little more.
At $10, we might start backing the truck up.
We have updated our current trades and we are seeing some decent action today. We are in a stock picker’s market and one where you need to hedge your bets. We have a mixture of calls and puts that we are using to play the market’s short-term and long-term moves as we wait for the next breakout (or breakdown). Subscribers, check the Members Area for the trade updates.