Does Financial Sector Indicate Bullish Trend Continuation?


FEATURED STOCKS: $LUK, $KEY, $PNC, $BRK/B, $BK, $SCHW, $MTB, $ETFC, $COF, $TMK, $SPG, $MAC, $KIM, $EQR, $PSA, $GGP, $AVB, $O, $HCP

 

Listen, all you have to do is look at this one chart to see that something very interesting is about to happen.

52-week high chart

Yes, ladies and gentlemen, 37.8 percent of the financial stocks going into the S&P 500 established a NEW-WEEK HIGH!!! Energy and Industrial have also been strong with 36.1 percent and 32.3 percent of stocks trading higher than ever in the last 52 weeks. However, we know why Energy and Industrials are up: OPEC figured it out. It must be time to make some money and stop the crude massacre.

But financials…? Here is why it might be very interesting. Financials is a leading sector – thus indicating potential drastic continuation of the bull trend going into 2017. However, maybe financials are just reacting to potential, and more and more likely, rake hike in December 2016, which could lead to higher returns.

And the reason why it’s interesting is because the market does seem overbought…just a little bit 🙂

Major U.S. Economic Indices

An even better look of RSI-split can be found below with RSI(10-day), RSI(14-day), RSI(20-day), and RSI(50-day) respectively.

Major U.S. Indices - RSI Split

In any case, if you would like to focus on the financials, you don’t have to take a course of Taro cards or palm-reading on Coursera to see that the market is heavily pricing in the rate hike. Banks, insurance and brokers are trading higher and higher, while real estate names are getting crashed.

52-week high and low: financial sector

Has market been wrong? Too often! But at least you know what Mr. Market is really thinking and now you can do your own research and either agree with the consensus and play along, or play the contrarian card and see what happens.

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