Financial Omen?

The markets have been doing just fine without the financials for a long time. As some are declaring that it is an ominous sign, could it be true? To me we are still in a rolling bull market and this is just the latest sector to catch some love. On a broader sector basis high yield is holding up well, a good sign for equities as they often rise in tandem (JNK higher 15 of the last 18 weeks). The XLF itself is showing some vigor with JPM and BAC, the second and third largest components in the ETF, just 3 and 4% off most recent 52 week peaks. The inclusion of the financials is a good sign in my opinion, and a move above a WEEKLY double bottom in the chart below would erase the lower highs.

Former Leader Fortitude:

Goldman Sachs has long been the subject to a negative narrative, but here we just like to take a look at charts, and leave any other discussions outside of PRICE action to others. It certainly no longer holds the clout it once did and trades 16% off most recent 52 week highs. There are some things to like with the digestion of the huge week ending 1/18’s gain of 14.5%. For 11 weeks it traded within the intraweek range, until blasting above the week ending 4/5. Round number theory comes into play as the very round 200 figure was resistance between January-March, and throughout April recorded just one CLOSE below. That is your line in the sand, and below is the Bollinger Bands that are “squeezing” which often predict big corresponding moves.

Examples:

The exchange names have been showing a bit of energy as of late. They have taken some sizable hits and CBOE recorded a 36.6% haircut from top to bottom between weeks ending 2/2-12/28/18. Below is the chart of the stock and how it appeared in our 4/17 Financial Report. It is now just 12% off most recent 52 week highs, and recently broke above not only its 200 day SMA (today was its ninth straight CLOSE above), but also through the very round par figure. The estimated measured move is to 111, and the current look at the name shows and add on above a bull flag pivot of 102.

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