Category Archives: Financials

Financials & XLF May Have Further to Run

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Financials on Monday responded positively, as expected, to the prospect of tax reform legislation, with names like Bank of America Corporation (BAC), Citigroup Inc. (C) and JPMorgan Chase & Co. (JPM) all gapping up on the open, following by higher closes of between 2 and 3.5 percent.

The Financial Select Sector SPDR ETF (XLF) surged 1.5% to close at 28.00, after gaining nearly 5% last week.

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Financial Parallel?

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The one consistent theme I’m reading about these days……..and I’m certainly inclined to agree with it……..is the puzzlement about the complacency with respect to a forthcoming change in Fed policy. In other words, the “great unwind” of $4.5 trillion in assets the Fed has gorged upon during the past eight years. Tomorrow is the big day, and as I suggested yesterday, things are going to be boring until then (as we collectively observed the changes of a few hundredths of a point across our computer monitors).

Anyway, in an effort to make a silk purse out of a sow’s ear, I offer you the chart below (which, as always, you can click for a bigger version). It offers up a parallel, or analog, if you like, with respect to financial stocks. I’ve got November puts against the XLF. It will be interesting, to say the least, to see what effect the Fed’s big announcement on Wednesday at 2 p.m. has on equities in general and financials in particular.

0919-XKF

“Shock Event” for 3 Top Insurance ETFs

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Price on three top Insurance ETFs has been dropping since mid-August, as shown on the following Daily charts of IAKKBWP and KIE. In the process, they made some extreme lower swing lows on each of their respective three technical indicators, suggesting that further weakness lies ahead.

As of Friday’s close, they are trading around their 200-day moving averages, so failure to regain an upward bias from that level could spell further sharp drops for these ETFs. Watch for any major volume spikes on further weakness to indicate possible panic selling. In the short term, we may, first, see a retest of their 50-day moving average (possible “Dead Cat Bounce”) before the next leg down occurs. (more…)