FINANCIAL ETF EXCEEDS 50-DAY AVERAGE -- SO DO SEVERAL BIG BANKS AND BROKERS -- HARTFOLD FINANCIAL IS DAY'S FINANCIAL LEADER

FINANCIAL LAGGARDS TURN UP ... We normally focus on market groups that have been market leaders. Today, however, I'm going to focus on the sector that has been the market's weakest throughout the fourth quarter. That would be the financials. The reason I'm turning to it today is that the group is finally starting to show some bounce. Chart 1 shows the Financials Sector SPDR (XLF) trading above its 50-day moving average for the second consecutive day. It has also broken a down trendline drawn over its October/December highs. The relative strength ratio (below chart) is also starting to turn up for the first time since mid-October. That means that money is starting to flow back into this lagging sector that includes banks, brokers, and insurance stocks. Several stocks in the group have similar chart patterns and are starting to turn higher as well.

Chart 1

HARTFORD FINANCIAL IS DAY'S FINANCIAL LEADER ... Hartford Financial is the day's strongest financial stock with a gain in excess of 6%. Chart 2 shows the insurance stock surging through its 50-day average in pretty decisive fashion. Its relative strength ratio (below chart) is turning up as well. Several of the large bank and brokerage stocks are also breaking through their 50-day lines.

Chart 2

BANKS AND BROKERS TURN UP... The next four charts show stocks that are among the biggest in the XLF. As a result, they carry a lot of weight. Not surprisingly, they all have similar chart patterns to the XLF as well. The four charts show Bank of America, Goldman Sachs, JP Morgan Chase, and Wells Fargo climbing back above their 50-day lines for the first time since October. That usually provides a good entry point for the stocks themselves or the sector as a whole.

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