Merrill Lynch at a 10 year low -- time to buy???
Best Answer
457 points
SallyG answered 2 years ago …
I'm more worried as to what will happen to my brokerage account there. Luckily, it's not all my assets, but if it goes under I don't know how to access my stocks.
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317 points
CG answered 2 years ago …
For me, no it's not time to buy. And I doubt it ever will be.
The trend has been for financials hitting 1-year lows to then hit 2-year lows, and then 5 and 10-year lows and so on. I see no reason to think it's at a bottom. In fact I'd be quite surprised not to see it much lower in coming months.
I've still got puts on MER, but have been shorting the financials since last year so it's all free money ergo I'm not worried about it and can always add might add more short on any significant rallies but I won't be going long.
317 points
CG answered 2 years ago …
Land of the Fleeced - http://www.marketwatch.com/news/story/fed-treasury-arranging-sale-lehman/s tory.aspx?guid=%7BD31ABF7C%2D5FF4%2D4B27%2D8895%2D3436C3E3DE4C%7D&tool= 1&dist=bigcharts&;
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4087 points
EthanR answered 2 years ago …
Yesterday's gap down on heavy volume will probably lead to further selling. Many gaps will fill, but then eventually head lower. Can you make money five years from now from yesterday's close at 19.43? Probably. But wouldn't you rather own the stock at 16 or 17? And you may want to take a look that P&F chart from the link below if you really want to see something bearish.
http://stockcharts.com/def/servlet/SC.pnf?c=MER,P&listNum=
251 points
MichaelShulman answered 2 years ago …
I expect the financial sector will tests its July low, and I believe the sector will bounce again … and bounce again, and then break through and break down until banks like Citigroup (C) and Merrill Lynch (MER) are selling in single digits.
I expect there will be short recovery rallies that if you're an extremely nimble trader, might yield some very, very short-term gains. But if you're looking for a long-term opportunity, the overall trend for Merrill and stocks of its ilk is down.
With these banks selling their assets (and thus their ways to make profits), all we have to look forward to is write-downs and dismal earnings.
Incidentally, in my ChangeWave Shorts service -- which uses put options to profit from ailing companies -- we just booked a 128% gain from Merrill puts in two days. There's definitely money to be made in the financials -- but it's on the short side.
