Royal Bank of Scotland Group plc + Barclays plc: As indicators turn positive we ask can the nascent recovery for BARC and RBS be sustained?

Royal Bank of Scotland Group plc : RBS short-term setup seen as bullish

Royal Bank of Scotland Group plc shares are currently 0.18 pct in the red at 284.90; while RBS stock may be lower today the short-term setup remains bullish after shares bottomed out on the 8th of April.






Analysis conducted by Recognia shows that RBS shares face 4 bullish technical events and 1 bearish event in the short term time frame of 2-6 weeks.

Both the momentum and MACD indicators turned short-term bullish on the 10th of April.

However, Trading Central believe that this nascent recovery does not present enough support to go long on the stock. "The downside prevails as long as 291.5 is resistance," say Trading Central.  

Analysts at Trading Central are taking a more medium-term view saying, "The MACD is below its signal line and negative. The configuration is negative. Moreover, the stock is trading under both its 20 and 50 day MA."

Barclays plc : BARC also facing pressure in the medium term

Barclay shares are 0.18 pct lower at 297.70 in mid-morning trade in London. Like RBS, BARC is pressured in the medium term; "the downside prevails as long as 291.5 is resistance," say Trading Central, "the MACD is below its signal line and negative. The configuration is negative. Moreover, the stock is trading under both its 20 and 50 day MA."

Recognia analysis shows that the short-term picture for BARC, like that of RBS, is certainly more constructive.

The Barclays short-term charts show 6 bullish events to 4 bearish events; that all 6 bull events have been formed since the 8th of April suggests momentum behind the stock is ticking up.

BARC's Price Crosses Moving Average (21-day), Momentum and Williams %R all turned short-term bullish yesterday.

Markets: Can fresh positive tone sustain RBS and BARC?

Will the broader market sentiment maintain the recent turn-around in fortunes for our two bank stocks? We note that investors are feeling rather more cheery at the start of April following a tumultuous preceding month and this always bodes well for financials.

Ishaq Siddiqi, market strategist with ETX Capital, says:

"European stock markets are broadly flat this morning in a mild pause after recent strength but the tone remains optimistic on the whole with stock indices still supported by BOJ’s ongoing aggressive stimulus response which has helped risk sentiment improve and China’s strong rise in imports. Resources stocks are the main beneficiaries on the back of this, as are financials so we are likely to see cyclical stocks firmly underpinned by these developments.

"The rally we have seen in that case does have legs to continue in the sessions ahead, with the tone for US 1Q earnings season [which is in full swing next week] positive after Alcoa’s numbers earlier in the week.

"At the same time, the Fed’s meeting minutes which suggested a tapering of stimulus after mid-year 2013 were greeted by markets with a muted response as investors are still of the view that US jobs growth is still sluggish and the sequester cuts are starting to bite.

"Traders believe that the Fed is unlikely to change course any time soon as keep the liquidity taps open. There is little on the data agenda to act as a catalyst for price action in the session so investors are looking to Italy’s bond auction for direction. In the US, we have weekly jobless claims which will be under scrutiny after last week’s decline in the indicator."

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