What Sector Will Start Performing Now That Everything is Extended?

Bank

Sector Performance and Rotation

The cycles in most sectors are extended, thanks to technology, energy and materials. The question isn’t will they continue, but rather, what will turn higher next? We continue our examination of the markets, pondering financials as a potential candidate. Since we like to catch the wave when a sector turns from a cycle low, XLF seems to be the next candidate.

XLF-Cycle-01-09-2018

The big banks are underperforming at the moment, so we are monitoring price action prior to earnings this Friday. JPM, WFC and PNC start the banking group earnings reports on Friday. Goldman has been selling the past few days, as institutions are making way for its report next week. Still, some banks are outperforming.

Banks and The Financial Cycle

If the cycle chart is beginning to turn it means that some banks are bucking the trend and under-performers rate of change is slowing. A change is under way, but we won’t likely see it in the big banks for another couple weeks. Start making your list, as the cycle will no doubt confirm in the short-term. If it does we’d like to trade stocks like BAC, BTT, JPM, OZRK, NOAH and STT once the dust settles.

STT reports in a couple of weeks. MACD is crossing. RSI is rising as the stock breaks out on volume. Bollinger Bands are expanding. If a continuation day appears today, a safe stop would be the Monday lows.

STT-01-09-2018

NOAH Holding

Investors Business Daily ranks this stock number one in its group. We are looking for a continuation day, as these Chinese provider of fixed income, private equity and securities investment products looks ready to run higher. NOAH does not report until the end of February.

NOAH-01-09-2018

SPY and QQQ are trending higher. Blocks are below and until that changes we cannot get bearish. Renko charts are steadfast and trending higher (bullish). Sentiment as measured by TICK cumulative shows institutions are buying more stocks on the uptick than they are selling on the downtick. NYAD is climbing, which can only mean they are buying more than they are selling.

Until the market changes markedly in its character, we remain bullish.

I will start the LIVESTREAM Broadcast around 9:20 AM. See you then!

Happy Trading,

Vinny



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Vinny Gambini

Trade Fundamentals w/ Technical Analysis - CANSLIM method using high probability setups and Ichimoku Trend Analysis. Architect, Family Man and Father of three.