As the S&P breakout sustains, for now, we look for incremental signs of strength in the market. While tech understandably hogs most attention, it is Financials that are quietly leading the charge. Not only is the financials index on the cusp of breaking new ground, a number of majors are already there and strengthening. Such is the broad base of the rally that over 50 financials stocks (from a universe of 73 in XLF) are in an uptrend with 5 names (includes JPM and Goldman Sachs) making all time highs and 9 at a 52 week high (additionally includes Citi, Capital One and Schwab).
Bank majors and asset managers are leading the charge, no doubt buoyed by expectations of easier capital rules and all 22 majors passing stress tests raising expectations of larger payouts. While asset managers are still some distance away from previous highs, they do have positive momentum.
Amongst the laggards, and although still in a downtrend, notable are Visa and Mastercard that appear to be reversing following recent sharp declines.
XLF - Showing Positive Momentum on a Rotational Basis
source: Stockcharts
Major Banks and Asset Managers Best Positioned
source: Stockcharts
