Good Faith Deposit:
Market participants have been burned multiple times by this group, but renewed faith in the technicals could prove profitable. Over a 3 month look back period, the XLF is the second best actor among the major S&P sectors, outdoing even technology. The 3 weeks ending between 6/7-21 all CLOSED very taut within just .12 of each other, and that type of coiling action often leads to powerful moves. Last week did jump 1.4%, and look for more follow through. C recently broke above a cup with handle pivot, JPM has acted beautifully since filling in a gap on 5/31 from the 4/11 session and GS is trading above the WEEKLY CLOSE ending 1/18 which ripped higher by 14.5%, its best weekly gain in at least 2 1/2 years. And this is all occurring with a 10 year below 2%.
Retail Investor Providing Clues?:
The saying goes the retail investor is not “smart money”, to put it nicely. They can often be used as a contrarian force, pessimistic near highs. If the chart of two of the biggest names in the arena, AMTD and ETFC, are telling us anything at all, it may be that it the benchmarks are most likely looking at more new highs. The price action is revealing in both of these stocks with AMTD and ETFC lower by 18 and 28% from their most recent 52 week peaks. Perhaps there is something more to it, like the competition of Robinhood, but the reluctance of the retail trader to put new money to work with his or her skeptical stance speaks volumes. Until this cynical behavior turns exuberant look at the markets with a rosy lens.
Payment plays have been a big disruptive force in the financial space. Names like GPN, TSS and nearly one year old PAYS have been brilliant actors. The firmness in the group is not contained to domestic names. Below is the chart of PAGS, a Brazilian play, and how it appeared in our 6/17 Financial Report. Full disclosure the 34.50 entry point was never hit as it traded as low as 34.93, but the chart demonstrates not only the power of the bullish inverse head and shoulders pattern, but shows why one should always look at longer time frames, with the WEEKLY chart here. This stock ran into trouble at the round 40 number, last March so it could be a double top here, or on the brink of a huge breakout. Potential trigger is 40.07.