Banks Holding, So Far

It is now the end of August and all the major Canadian banks have reported their quarterly results. This seems like a good time to revisit my take on bank stocks from just over two weeks ago (August 13).

At the time I was optimistic, figuring that most of them would hold above their 50-day moving averages. This was wrong - they pretty much all dipped below that line leading into this week. (I can treat the banks as a group since, despite their distinctness, their stocks do tend to behave alike with extraordinary regularity.)

Those dips in share price were accompanied by low volumes and (apparent) trepidation about earnings, so I chose to hold my existing position in one of those banks. The questions I did wonder about were:

• Are the low expectations for their results baked into the share price?
• Is the low volume instead due to late summer doldrums, as is generally true across the market just before Labour Day, rather than a drying up of selling?

Now the results are out, and while not great they seem to be above investors' expectations. I can now breathe a sigh of relief that, so far, I seem to have made the right decision. All the majors are now trading back above their 50 DMA lines. Let's see if this price appreciation continues in September.