Financial Stocks Cycle Up Continues
Financials, led by banks, insurance, financial administration and brokerage stocks remain in an up cycle that started two weeks ago. Banks have been reporting decent earnings, with BAC, JPM, GS, MS and WFC at the top of the list of candidates. Regional banks also exhibit some potential.
As price moves away from the ascending moving averages, the probability of a pullback increases. Look for a pullback that gets bought to start a new position, if you missed the opportunity shortly after JPM, WFC and PNC reported earnings.
Utilities – Up Cycle
Utilities have started to turn higher as well, with the cycle showing continued interest in this beaten down sector. Watch the multi-utility and interest sensitive stocks in this group for more upside in the coming weeks.
Mean reversion in utilities appear to be gaining momentum. This could lead to swings lasting several weeks before reaching overbought conditions.
Transports Cycle Down – Airlines
United reported a beat last night, yet the stock is trading lower pre-market. Most of the major carriers are lower in sympathy.
Delta reported very good earnings, so we are anticipating the buy the dip crowd might show up looking for a margin. Don’t follow their lead until confirmation shows up in the form of block trades. If institutions aren’t interested the stocks in this industry will go nowhere in the short term.
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