A strange and winding day for the shares of major U.S. financial companies ended as oddly as it began, as shares of major U.S. banks seemed to brush off bad news on sovereign debt ratings that rattled the wider market and the biggest financial institutions traded on the New York Stock Exchange ended the session on a sell imbalance.
At 3:45 p.m., as the market operator does every trading day, the New York Stock Exchange noted the demand-and-supply imbalances the market was registering at the moment. Sell imbalances were noted for Citigroup (NYSE:C), Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS). Some of the imbalances were significant, particularly those for shares of Goldman Sachs and Bank of America.
Sell imbalances, which note the exchange operator is sitting on a substantial number of "limit" or "market on close" sell orders that it has not been able to fill, are common after big rallies, as traders are likely to be offering to sell shares at a price just a tad higher than the current market price of a stock.
But they are a bearish sign, especially if the amount of shares in unfilled "sell" orders constitutes a large percentage of the day's volume for that stock, and almost always serve as a prelude to a drop in share price during the last few minutes of trading. Such was the case, for example, after the big rally on Friday, where the same five companies noted above, as well as Wells Fargo and Co. (NYSE:WFC) were marked with sell imbalances minutes before trading ended for the week.
But not today.
From trading at $99.42 just 15 minutes before the close of the session, Goldman Sachs closed at $99.91, up 49 basis points (0.49 percent) in that brief time frame. Bank of America rose 34 basis points. Citigroup climbed 67 basis points. JPMorgan's basis point surge was 69. Morgan Stanley had the best final 15 minutes among its peers, rising 79 basis points from 3:45.
The topsy-turvy end to the session followed an even odder day for financial stocks that started with a rally in spite of weak economic data from the United States and continued nearly unscathed after a report that rating agency Standard and Poor's was looking into placing a host of European nation's sovereign debt on downgrade watch.
Financials might pay for their exhuberance tomorrow. Shares of all the company's noted above, except for those of Goldman Sachs, were down in after-hours trading.