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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.
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.
On November 6, we noted in our Mid-Day Markets update that a comparison of the SPY and IWM showed a deterioration in the Russell 2000 small-cap ETF relative to the big-cap SPY. We said that as long as IWM was trading below its 20 DMA at 149.11, we would view it as vulnerable to downside continuation off of its Oct 9 all-time high at 150.58.
We were watching and continue to watch this SPY-IWM relationship closely, as, historically, in the later stages of a bull market, a divergence is very likely. In other words, as a bull market loses steam, small companies lose upside momentum relative to the “go to” mega-capitalized companies. (more…)
The SPDR S&P Metals and Mining ETF (XME) could be on the verge of a surprising, very powerful upside breakout after completing a 6-month corrective accumulation period.
After Trump was elected last November, the XME climbed from just under 25 to a February 2017 high at 35.21, or a whopping 41%, in anticipation of the enactment of the Trump agenda, concurrent with lower taxes, stronger economic growth, and upward pressure on inflation.
Thereafter, however, in reaction to the Administration’s failure to pass health care legislation, coupled with a myriad of disappointments and political fumbles, prospects for “The Trump Trade” faded miserably.
To anyone friendly to natural gas for the past five months, holding a long position certainly has been a challenge, and has been more akin to riding a bull on the PBR circuit.
Just to illustrate the bumpy ride, take a look at the 4-hour chart of the nat gas futures (NG) showing the price swings across a multi-month range carved out between 2.90 and 2.82 on the low side of the range, juxtaposed against resistance atop the range at 3.15 to 3.23. Within that range, over several months, there has been no significant change in the perceived fundamentals that indicate there is just too much natural gas around to lift prices consistently above 3.15 for any length of time, yet there is also an apparent perception that under 2.90, nat gas prices are relatively cheap.
