BAC=$2.93, C=$1.80, GS=$79.40?

Apologies to my regular readers for the late posting today, but it is options expiration Friday and sometimes K10 needs to focus on trading.  There is little in the news to mock today, unless you really enjoy watching our nation's financial stocks meltdown in slow motion.  Sure it's fun making a mockery of the idiotic way in which most of the financial firms around the globe were managed during the past few years.  But even as bearish as I've been, it's quite distressing watching the market carnage and wondering if it will end before every single bank stock in America is trading in the single digits.  By that measure, we still have a ways to go as Goldman Sachs is still a $79 stock.  

As I have noted before, equity investors are confronting the serious question of whether the equity in any bank is worth more than zero.  Given the amount of leverage in the banking system and loan portfolios that are souring quickly with the deteriorating economy, it's hard to make any case to buy bank stocks.  But still, some diehards are out there paying $1.80 for Citigroup and $2.93 for Bank of America despite the fact that these stocks in particular have been in a death spiral for some time.  It is also interesting to see that investors are making, in some cases a stark distinction between Citi and Bank of America and other banks (i.e. JPM, GS, MS, none of which are at 52 week lows, much less in the single digits.)  As I learned while trading the tech bust, the market likes to correct one stock at a time as if investors come to realize slowly that all stocks in a deteriorating sector are equally screwed.  The bank stock bust seems to be following that model.

The market typically likes to rally on expiration Fridays.  That is not looking likely today.  But with both the S&P and the Dow flirting with new lows, and the prospect of an FDIC seizure or two after the close, Monday might be looking even worse.