Seasonal Tailwinds:
The financial stocks have surprisingly not dominated headlines as much as one would have thought with interest rates. Quietly over the last one month period they are the second best major S&P sector performer higher by more than 8%, trailing just energy. On a 6 month look back period they are the best actor with the XLF advancing 12.5%. Within the ETF there is a healthy representation of insurance names, and the fund has benefitted by the space as the KIE is trading right at a cup base breakout pivot of 35.26. From a seasonality perspective the XLF is coming into the best back to back monthly action, as 3 out of the last 4 years it finished higher than where it started and in November it was a perfect 4 for 4.
Better To Have American Than Federal Before Express In Your Name:
Some recent action among the credit card plays has been suspect. Both MA and V have broken below bear flag formations, but have been unable to provide and meaningful follow through to the downside. All of the stocks below are not drastically off their most recent 52 week highs, as they trade between 7-12% off their peaks. One takeaway from this comparison chart is how all of the participants are trending lower in September, except for AXP which seems to be flatlining. Is that relative strength a harbinger to a higher stock price? Of course no one knows that for sure, but the probabilities are likely better for it than its peers here. On its chart some positive bottoming candlesticks include bullish engulfing on 8/28 and 9/23, and harami cross completed on 9/4.
Examples:
Patience is a virtue. We constantly try and convey waiting for PRICE to confirm on a CLOSING basis. One subsector of the financial names that have been acting recently were the exchange plays. ICE and NDAQ sit just 2% from most recent 52 week highs, although the latter name took a 6% combined haircut on 9/9-10. It is a good example of what we discussed in the first sentence of this paragraph, as it was above a cup base pivot of 104.72 intraday on 9/9 before recording a bearish dark cloud cover candle. Another lesson is the chart below of CBOE and how it appeared in our 9/9 Financial Note. It never was able to pierce the bull flag to the upside and fell more than 6% that week.