Dominic Picarda’s Technical Take
Ultimately, however, it is important to recognise that the financial crisis and its consequences are likely to remain major issues for the UK banking sector for some time to come. Further financial shocks from the Eurozone are still a big risk, and the banks may yet require further injections of new capital. In this environment, dividends are unlikely to grow significantly, while increasing regulation could also hold the industry back.
To play the current rally in banks, one possibility is to take out a spread bet on the FTSE 350 Bank sector as a whole. This avoids the problem of having to decide between the very different propositions in the industry and allows you to catch the broad market swings. Currently, the short-term trend is plainly upwards, so my bias for now is obviously to the long side.
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FTSE 350 CHART
November 2012
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