Sand Spring Advisors LLC
Another Financial Stock Under Pressure
February 2, 2002
by, Barclay T. Leib
We do not regularly follow the stock of Household International (HI) pictured above. All we really know of the company is that it is a middle-market consumer lending company that has had steady past earnings growth, and presumably because of such growth, Household International currently sports a $23 billion market capitalization and is trading at over 3 times its book value. It does so despite a 7-1 debt/equity ratio.
We also know that consumer lending is becoming more and more of a dangerous business these days as the average American household slowly becomes tapped out, and that technically, many financial stocks are starting to break down.
Asked by a Sandspring.com subscriber to specifically take a closer technical look at Household International, we also see a convergence of several trend lines plus an extrapolated Fibonacci target all clustered near $41.68 a share. One could similarly imagine an Elliott wave count where a 5th wave decline leads into this region.
Capital One, AIG, and JP Morgan remain the financial stocks that we are most focused on for ongoing downside weakness, but Household Financial may be another financial stock in some trouble at this time.
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