Despite their recent decline, European bank shares are still trading above the level implied by German bund yields, making them about 5 percent overvalued compared with the broader stock market, according to strategists at Deutsche Bank AG. Banks have benefited from analyst earnings upgrades but a stepdown in expectations for economic growth could continue to push yields lower over the coming months, leading to further underperformance for the stocks.
Comment:
The Europe banking sector index break the upward correction channel and currently at a key level of support that, if break, we will probably see a decline in European bank stocks. From the graph below, it is clear that during the last upward wave of the corrective movement volumes are falling and the price is piercing the channel, which is a signal that investors are not willing to buy. We have Double Top - also a negative signal.
Alternative Scenario: If the price goes back into the upward channel and break the double top formation, the negative scenario will be breaks and we are more likely to see growth in the European banking sector.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.