FINANCIAL SPDR IS FINDING SUPPORT AT 50-DAY AVERAGE -- S&P BANK SPDR IS ALSO TRADING ABOVE ITS 50-DAY LINE -- BANK LEADERS INCLUDE J.P. MORGAN CHASE, REGIONS FINANCIAL, AND ZIONS BANCORP -- INSURERS ARE ALSO HAVING A STRONG DAY
FINANCIAL SPDR CONTINUES TO BOUNCE OFF 50-DAY AVERAGE... My message from last Wednesday showed the Financial Sector SPDR (XLF) starting to bounce off its 50-day moving average. Chart 1 shows that the XLF continues to find support at its 50-day line. That's an encouraging sign. The gray area in Chart 1 shows the XLF/SPX ratio slipping during November, as financials underperformed the rest of the market over the last month. But it's leading the market higher today. Chart 1 shows that the XLF also remains well above chart support along its early August peak. Previous peaks usually act as support on market pullbacks. That's why the flat line turned from red to green once the August peak was exceeded. Financial stocks aren't getting much help from bond yields which remain soft. But they appear to be encouraged by testimony from Fed nominee Jerome Powell before Congress that he's not inclined to add to bank regulations. Both banks and insurers are having a strong day.
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Chart 1
S&P BANK SPDR IS TURNING UP... Chart 2 shows the S&P Bank SPDR (KBE) also continuing to trade above its 50-day line. The KBE is climbing again after bouncing off its 200-day average a couple of weeks ago. Its relative strength ratio (gray area) is starting to bounce as well after a soft November. Three of the individual bank stocks leading it higher today are also shown. They include J.P. Morgan Chase (Chart 3), Regions Financial (Chart 4), and Zions Bancorp (Chart 5). The last two bank stocks in Charts 4 and 5 appear headed for a test of their spring highs. Insurance stocks are also having a strong day.
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Chart 2
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Chart 3
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Chart 4
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Chart 5
CHUBB, PRUDENTIAL, AND TRAVELERS LEAD INSURANCE STOCKS HIGHER... Three of the day's strongest insurance stocks are shown below. Chart 6 shows Chubb (CB) bouncing nicely off its 50-day line (blue arrow). Chart 7 shows Prudential (PRU) doing the same. Chart 8 shows Travelers (TRV) also trading above its 50-day average and a line of support drawn over its August peak. JP Morgan and Travelers are among the three biggest percentage gainers in the Dow today. It's good to see some leadership from financial stocks for a change. That's better for them and the market.
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Chart 6
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Chart 7
