Forgive the the runners analogy, but banks have done all of the work to get ready for another run higher. As they enter the “starting blocks”, the banks that have prepared for their next leg up, have begun to show signs of the next “Usain Bolt.” Rather than pick individuals, we decided to start XLF yesterday.
Then as we break higher, we will add to our individuals positions. Bank of America, Citi, Morgan Stanley, JPMorgan and Goldman Sachs are on the top of our list to increase position size over the next few weeks into earnings season and the second half.
Institutions have been buying banks in large blocks. The XLF sector has seen a lot of activity as well. And, with JPM upgrading banks, you know they are prepared to pop out of their “starting blocks.”
Goldman is pressing against the 227 level this morning. If these banks break higher today, our long time member Russell will be rewarded handsomely. Russell’s motto is “Go big or Go Home”. Mr. Big, has a pretty big trade on Goldman, with 200 of the Jan 19 2018 calls and 215 of the Jul 28 calls. Good luck today Russell.
The fun isn’t limited to domestic US banks either. The European financials, which cover European banks is trending much better this year. With Mario Draghi talking of interest rate hikes, this chart will only see higher prices.
Just make sure you buy the pullbacks, to increase your probabilities. Traders Tip # 12 covers this in less than 4 minutes.