Financial Fortitude

March 14, 2022

Sector Overview

While financials have fallen from grace in recent weeks after being relative strength leaders early in the inflation run, over recent weeks they have made a trip back to the bottom of the recent range, even slipping below it to start last week. It looked like an ugly range breakdown at the close on Monday, but fought back the rest of the week. We need to see our equal weight sector move back above the blue box to get it back into the range and forge a failed breakdown.  You can see this more clearly below in the $XLF chart.  We did not enter the week expecting to see Financials lead us out of the gate, so naturally we want to see what is going on.

A quick look at the subsectors shows the Regional Banks and big Banks were still on top here and have held up the best while Brokerage and Diversified Financials & Credit Services took a lot of the heat recently. In a circumstance like this where we see a previous leader pulling back hard and then looking to put in a reversal, we would concentrate on leading RS rankings as well as the RS movers.  In the Financial ETF Rankings below you can see that Regional Banking and Insurance ETFs are clustering near the top here

Both of the tables  and the chart above can be found on the Financials Page

Chart Reviews

Below are verious names that caught out eye during our research process that might be worth a closer look. It is certainly not an exhaustive list, but should give plenty of names to review and develop a plan around based on your trading style and strategies.

Ticker: $NCBS

Chart Notes:

  •  Daily RSI stretched, but weekly has plenty of room to run.
  • Arguably the strongest financial stock
  • Previous base tested VWAP five times without closing below.
  • Recent daily breakout.
  • Relative strength line compared to XLF is at new highs and has been steadily rising for months.
  • Could buy the breakout or wait for a re-test entry.

Ticker: $SPGI

  • Pullback play for a contrasting style to the breakout trader.
  • RSI is in bear ranges on daily and weekly.
  • The last pullback bounced nicely from the major VWAP and is now bouncing again from the same level. 
  • In both cases, the VWAP was in confluence with previous significant levels.
  • Volume was huge on the most recent swing low.
  • For a trader interested in giving it a shot, the level of interest isn’t very far away.

Ticker: $CME

  • Weekly RSI is testing the bull range where it held previously.
  • Daily RSI is in a clear RSI bull range and is reversing up at the half way mark.
  • The major breakout level has continued to be a significant point of support.
  • The VWAP from the major low has been where buyers have stepped in twice.
  • Currently the stock is pushing a resistance level and need to close above there.

Ticker: $RJF

  • Daily RSI is in a bear range, but reversed quickly after moving below 40.
  • Weekly RSI is grinding lower, but is after a major move higher where RSI topped at 85.
  • The previous breakout level has continued to be a significant level as price tested it four times without closing below.
  • Currently there is resistance overhead from another breakout level where price has reacted previously.

Ticker: $SLF

  • RSI daily is still in a bear range, but making a long to short term divergence move we like to see
  • Weekly RSI is holding the RSI bull range test and reversing
  • Pullback held the daily volume node and is now challenging the weekly node above. move over gets things started.
  • Weekly chart also held well at the volume node on the pullback and is now trying to remount hte MA Bands
  • the 65min chart shows the near term volume resistance that we are dealing with overhead
  • currently above rising 5 day moving average and AVWAPs from recent high an low. 
  • can work against 51ish area.

The charts and tickers above are for educational purposes and are not recommendations to do anything.  This is just to help show you what we see and then let you take it from there and do your own due diligence. Either build your own trade plan or get with your advisor or broker form one before considering any ideas above. Please see the link to the full disclosure in the footer