While reading a nice article at the Pragmatic Capitalist called "FDIC PLANNING FOR HUGE BANK FAILURE?", (now why would I be reading something like that?) I found a doozy of and article in the foot notes by J. S. Kim at The Underground Investor called US Bank Shares - The Pump is Almost Over, Get Ready for the Dump. Oooh, even better! You know I could not resist a title like that.
Kim has written an article that helps explain a lot of things. Mainly, why the banks are so overvalued. This really has flipped a switch for me as to when the pump will end and could be a great road map to playing and timing the market turn. The post also adresses ideas like, "Bank of New York Mellon Corp., Capital One Financial Corp., U.S. Bancorp and BB&T Corp. will sell shares to repay U.S. aid after stress tests showed they don’t need additional cushion against a deeper recession. If there is a better example of an oxymoron, I don’t know one." You know, some things are so obvious you just miss 'em, and this simple thought flew right over my pea brain.
Kim summarizes, "In a pump and dump scheme, there is always a phase II. Note the urgency of many financial institutions to complete their secondary public offerings of stock and debt as soon as possible. This urgency is a classic sign of a pump and dump scheme as it signifies that the rapid rise in current bank share prices have been built on zero fundamentals and is thus unsustainable. Now that the pump scheme is largely in play already or in some instances, has even been completed, get ready for phase II - the dump." The classic sell high buy low move.
Finding the top might be as simple as waiting for all the secondary offerings to be completed. As each offering is completed I would assume the stock should peak or flatten off till the group is finished, thus creating really some good shorting opportunities IMO.
UPDATE: This is not a P3 event IMO. Just a possible cause for a much needed (manufactured) correction of the run off 667. Earnings manipulation will continue for a quarter or two for the financials and this action may create another short squeeze opportunity. IMO of course.