The financial sector is outperforming. Asset managers, insurance and bank stocks are projecting improving economic conditions. Commodities echo this sentiment as copper follows through. Industrial production is printing higher lows, while yields rise across all durations. It appears the markets sense changing conditions as well, with companies reporting robust earnings growth (YoY).
Summary
S&P Futures are testing 4175 , a major gamma level and 4170 this morning (Volatility Trigger). It appears dealers and market makers are defending this zone in the pre-market session.Any move below this level should be considered short-term bearish.
Levels below are 4150, 4100 and 4000. A loss of 4100 has been on our radar for weeks, wherein a move below 4100 would likely result in a quick move to 4000.
Financial Sector
The financial SPDR ETF (XLF) is home to a wide array of diversified financial service firms, insurance, banks, capital markets, consumer finance and thrift companies. Among the stocks included in the Index, ranked by weight and in descending order, are Berkshire Hathaway (BRK/B), JPMorgan Chase (JPM), Wells Fargo (WFC), BankAmerica Corp (BAC) and Citigroup (C).
We will add to or start new positions in banks and XLF on pullbacks to the 9/21d that find buyers, so long as RSI stays above 50. We will use our Daily Workflow when considering candidates.
Financial Sector – Weightings
| Symbol | Company Name | Weight |
|---|
| BRK.B | BERKSHIRE HATHAWAY INC CL B COMMON STOCK USD.0033 | 12.93% | ||
| JPM | JPMORGAN CHASE + CO COMMON STOCK USD1.0 | 11.54% | ||
| BAC | BANK OF AMERICA CORP COMMON STOCK USD.01 | 7.56% | ||
| WFC | WELLS FARGO + CO COMMON STOCK USD1.666 | 4.63% | ||
| C | CITIGROUP INC COMMON STOCK USD.01 | 3.78% | ||
| MS | MORGAN STANLEY COMMON STOCK USD.01 | 3.07% | ||
| GS | GOLDMAN SACHS GROUP INC COMMON STOCK USD.01 | 2.98% | ||
| BLK | BLACKROCK INC COMMON STOCK USD.01 | 2.88% | ||
| SCHW | SCHWAB (CHARLES) CORP COMMON STOCK USD.01 | 2.60% | ||
| AXP | AMERICAN EXPRESS CO COMMON STOCK USD.2 | 2.47% |
Warren Buffett sank more than $2 billion into Bank of America (BAC), turning it into his No. 1 stock by number of shares.
Apple was No. 1 by market value and portfolio weighting, at 44%.
He dumped all his airline stocks and several long-held bank stocks in 2020.
IBD Ranks BAC #4 in the group.
Bank of America is trading at highs, with momentum bullish.
“Profits doubled in the first quarter”, as the improving economy allowed management to release billions from its loan-loss reserves that it originally set aside in the early days of the pandemic. The release of reserves helped bank profits soar compared to the year-ago first quarter. The bank had a net one-time gain of $1.86 billion for releasing these loan-loss reserves.
The Charlotte-based banking giant earned $8.1 billion in the quarter, equal to 86 cents per share, compared to a profit of $4.01 billion, or 40 cents a share, in the same period a year earlier. Analysts were looking for BofA to earn 66 cents a share.
Like JPMorgan Chase and Goldman Sachs, which also reported its results the same day, BofA had a strong quarter in its investment banking division. Total profits in the division rose to $2.05 billion from $1.71 billion in the same period a year earlier. The bank saw revenue gains on its trading desks, a reflection of the healthy volatility the markets had last quarter.
Join us today in the trading room for our daily “live” broadcast during market hours, as we navigate the current environment. Watch, listen, and trade from 9:20 AM to 4:15 PM Monday through Friday.
Happy Trading,
Vinny
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