European Strength:

PRICE divergences are often clues as to future direction. Within the financial arena, some of this is starting to show up in the European banks versus the domestic ones. In the last couple of weeks, the EUFN has risen by 1.1 and 1.9%, while the XLF has dropped by 3.5 and 1.8% respectively. It is a small sample size but one to monitor. Both ETFs are off by 19% from their most recent 52-week highs and over the last one-month period the EUFN has “outperformed” down 3%, while the XLF has dropped double that at 6%. One thing that can be aided EUFN’s strength is the robust dividend yield of 4.7% compared to the XLF’s 1.9%. Top holding HSBC if it can hold the round 30 number it puts a future double bottom pivot of 35.34 in focus. BNPQY has the look of a nice bullish ascending triangle with a break above 28 carrying a measured move to 34. Give credit to the US banks today as JPM rose more than 6% on the best daily volume in more than 6 weeks. I just think at the moment it makes sense to overweight the European finnies.

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