Swimming Upstream:

The financials nascent strength was on display as the XLF was one of only three of the major S&P sectors to advance Thursday rising 2.2% (they more than doubled the second best actor in the industrials with the XLI gaining 1.1%). On a one week look back period the XLF is second best group, just behind energy, and some may declare their is a “dash for trash”, as these spaces have been soft overall. The XLF is still lower by 20% from most recent 52 week highs, while the XLE is now 36% off its own yearly peak. Know your time horizons as this fledging power is also hanging tough on a one month time frame too, bested by just the industrials. One can get the picture now as we are seeing a clear rotation into cyclicals names. They only question is this temporary, or something longer lasting. Of course no one knows the answer to that question, but it would pay to focus on stocks in this financial arena. Sure they are playing catch up and have lagged, but give them merit until it is no longer technically fitting.

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