The Key to the Stock Market Rally: BAC, GS, C, WFC

The bank stocks have finally started to participate in the market rally. This first started with Warren Buffet investing $5 billion in Bank of America Corp (NYSE:BAC) last week. Logic dictates the President of the United States asked Buffet to give the markets a boost of confidence. In addition, Buffet gets a 6% yearly dividend from the preferred shares and the option to buy 700 million shares of Bank of America at $7.14. This is a sweet deal but to be expected from a seasoned capitalist like the Oracle of Omaha. This action gave the financial sector a one day boost. Now Europe is giving it a more sustained rally.

Any sustained rally must contain gains by the financial sector. Remember, the banks are at the core of what is going on in Europe and the massive fear that has spread from their debt crisis. If you look at any bank chart you will see they have been a leading indicator of the recent downside and the hardcore issues hitting Europe. Bank shares like Goldman Sachs Group, Inc. (NYSE:GS), Citigroup Inc. (NYSE:C) and Wells Fargo & Company (NYSE:WFC) all made their yearly highs at the start of 2011. The weakness was a golden indicator of what was to come.

Now they have started to rally. While the rally may be short lived, it does show a build in confidence in the markets that will last through the holiday weekend of Labor Day. If you want to know the health of the market, simply follow the financial sector.

About Gareth Soloway 168 Articles

Affiliation: InTheMoneyStocks.com

Gareth Soloway has been an avid swing and day trader since his days at Binghamton University where he studied Economics. After college, Gareth quickly excelled as a financial advisor, helping clients get their financial houses in order. While helping others gain financial independence, he continued to study the day trading and swing trading world, developing a unique market philosophy and proprietary methods. Following his work in the financial sector, Gareth went on to trade alongside professional traders. Unable to tolerate the hype of Wall Street any longer and having an amazing ability to profit using his developed techniques, Gareth Soloway decided to partner with his friend and colleague, Nicholas Santiago to form InTheMoneyStocks.com. Chief Market Strategist Gareth Soloway serves as the president and CFO of InTheMoneyStocks.Com.

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