Bank Shares: It's Safer To Run With The Herd?

The stock market had a cheerful day today, finishing at almost the day's high. Major bank stocks didn't join the fun until afternoon; Bank of America (BAC) and Citigroup (C) ended up red.

However, according to the "Money Flows" table at Wall Street Journal site, professional traders and institutional investors (as indicated by Block Trades) were buying banks throughout the day. Citigroup ended up at the top of the "Buying on Weakness" list for the day. During the day, I saw Bank of America, J.P.Morgan Chase (JPM). Wells Fargo (WFC), which was in green almost all day and listed in the "Selling on Strength" list, was also being bought at the same time.

One Yahoo SKF message board member summed it up succinctly:

"Since the "Stress Test" - fake or real - investors have stampeded to buy bank shares. Arguing that they are right or wrong is not the point. The point is that it is foolish to stand in the way of a mad herd. When you see the herd coming your way, the last thing you want to do is stop to think why. It is much safer to just run like h#ll! "

I tend to agree.