Investment banks have been out of favor lately, primarily because of the sub-prime mess and the enormous multi-billion dollar write downs that have followed. The majority of these institutions was involved in some very risky operations no doubt lead partly by greed and over confidence bias, yet as the old adage says “if you play with fire , you r going to get burned”. However, investment banking institutions are an important factor in the capitalist economy and in the current climate when the tide has come in those that can’t swim will drown and those who can will emerge stronger with larger market shares. Credit Suisse which is a large global financial services institution based in <st1:country-region w:st="on"> <st1:place w:st="on"> Switzerland </st1:place> </st1:country-region> with three separate operating divisions, private banking, investment banking and asset management is one institution I believe will survive.
Although the CS share price has been hit hard like any other financial (currently 25% down in the last 12 months) it has still outperformed its industry group (which is currently down 65%). Fundamentally, I wouldn’t call this stock a golden child but it has potential as a relatively low risk position in the financials. Technically, CS hit its 52 week low of $38.43 on 17 July 2008 and continued to rally quite impressively to $51.07 on the 25 July 2008 before retracing to its current price of $46.65(July 28 – close) which is near the 38.2% fib ratio. The 50 day moving average is currently $46.80 and the 200 EMA is $53.43. Credit Suisse has a market moment score of 93 and therefore should be traded as a momentum play with a projected forecast price of $65.
It should be noted that trading any financial stock in the current market climate is extremely risky and should be only be done with exceptional money management. This analysis is for a longer term forecast of up to one year.
$47.41 (07/28/08)
