#BankStocks – as GS and DB tumble…

It is on my my mind that we’re seeing 2007 all over again in the financial sector stocks.

During the pullback in the SPX since January, housing stocks and the bank stocks have been breaking support and beginning to “stair-step” down (see the chart below), led to the a possible 2008 cellar by DB and now with GS (a bellwether, no less) following suit.

The rest of those I follow – JPM, BAC, WFC, USB – are sitting right on support. It the market takes another hard hit (like tomorrow?), they could all be in solid downtrends.

Needless to say, as the banks and the general market tend to feed on each other in up trends, they can also eat other alive to the downside too.

(click on the chart for a larger view)

$TNA – up 26.3% on this swing…but…

Twenty-six-point-one percent in little over a month since long-term breadth gave a buy signal a bit over a month ago.

And now it’s up four days in a row on this swing leg of the rally, wildly overbought, with CNN MONEY’S Fear and Greed Index lodged solidly in the “extreme greed” level, and short-term breadth clicking down a bit today, all signs that the market and the stocks are both ripe for a dip if not a sell off but…but it has to turn down first and it has not done that. Amazing how many times traders can look at something going straight up (or straight down) and convince themselves this move is going to end – right now! Maybe, but until is does there is nothing to do but tighten stops but still give it enough room to keep going.

Among the other leveraged index ETFs, like TNA, XIV is up 23.2%, UPRO up 9.7% and TQQQ, the Nasdaq 3x-Leveraged ETF, is the laggard up only 6.7%. In a four letters TQQQ’s trouble is AAPL, with the highest weighting in the index – down 4% on the same market signal in the same time period.

Among the leveraged sector ETFs, ERX (energy) is up 35.3% on the signal, LABU (biotech) is up 24.1%, SOXL (semiconductors) is up 24% and FAS (financials) is up 11.9%. Same market signal, same time period.

We’re talking a little over a month here so it has to be said yet again – this what swing trading is all about.

SWING TRADING SIGNALS:

PRICE: Buy. (Day 3).
SHORT-TERM BREADTH: Sell. (Day 1).
VOLATILITY: Buy, (Day 3).

CONTEXT:

SPY CLOSE – 250.35.
QQQ CLOSE – 144.41.
LONG-TERM BREADTH: Buy (Day 34).
CNN MONEY’S FEAR AND GREED INDEX: (79 rising, extreme greed level).
NIFTY-50 STOCK LIST: 33 Buys; 9 Overbought, 6 Oversold, 8 new buys today, 6 new sells.

(click on the chart for a larger view)

$GS $JPM $BAC $DB – banks of a feather bounce together…

Update April 3, 2107:

After eight days down in a row on the Dow, today’s bounce was nearly inevitable.  Eight days in a row is a lot when four is most often the magic number to buy for a bounce.

And as inevitable, an oversold sector is likely to bounce with it.  In this case, the financials – that is, the banks — GS, leader to the downside, as well as JPM, BAC, and even the deadest dog of the bunch, DB, which has some serious fundamental problems all its own (besides being the last lender to loan to Donald Trump).

Most likely this bounce will continue in a rise to resistance, most likely to bottom of the boxes indicated on the chart below at the point the stocks fell through support going into this recent decline.

If they turn over again with lower highs sometime soon…say, next week…that will not be good for any bull market going forward.  In other words, head up the bull might actually be stumbling.

(right click on the chart for a clearer view)

BANKS2017-03-21_1036