Wednesday, April 21, 2010

CNBC: Short Squeeze in Regional Banks?

Volume is big in regional bank names as all are hitting new highs: can you say "short squeeze?"

Why? I've told you about the key trends, which all banks are now reporting: 1) improving credit trends and 2) net interest margin (the spread between borrowing short from depositors and lending long to borrowers) improved last quarter.


This is why you read Trend & Value, to hear about the inevitable, ahead of time.*

And for what it's worth, I don't know if an explosive short squeeze is really in the works. My target of $29 on KRE has about been hit, so I am content with what the regionals have done the last few months. If you took my advice on KRE or individual banks when I made the recommendation in December, my suggestion now is to look at protecting profits. Selling into strength would be the general strategy.

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* not a lot on the blog about short squeze potential, but I think it was addressed in the newsletter at one point.