Looking for a place to deposit your money? I’ve got your trade right here – July 15, 2024
Dan Fitzpatrick here at StockMarketMentor.com. Let’s do a quick look at the Financial Sector ( NYSEARCA: XLF ), in particular the banks.
I like these, we’ve had Bank of America ( NYSE: BAC ) on the Active Trade List for a while. I’m going to wind up putting a boatload more on today. What I like about this ( NYSEARCA: XLF ) is the proximity of the squeeze to the 50-day moving average. This is where you want to see this happen.
It reflects this build-up of energy in a very, very tight range. It’s this compression pressure cooker type of thing, where all it takes is a little bit of push to the upside, and boom, it will explode. We love these volatility squeezes, that’s what we’re seeing with the XLF ( NYSEARCA: XLF ) now. It’s just pushing off above the 50-day moving average.
This is what we want to see, up and down right along the 50, and it’s flat. A flat 50-day moving average, an uptrending 200-day moving average. I think this is just starting a nice trend to the upside. Now, we look at Bank of America ( NYSE: BAC ). It has been working this way for a while, and it continues to do so. Wells Fargo ( NYSE: WFC ), not so much. This is one that you definitely want to avoid.
But if you look at Goldman Sachs ( NYSE: GS ), a nice breakout to the upside. It’s walking right along the upper Bollinger Band, as is JPMorgan ( NYSE: JPM ), trying to do that. This is in a sideways consolidation here, but overall it’s running higher. Morgan Stanley ( NYSE: MS ), I like this better than JPMorgan ( NYSE: JPM ) by far. Also, right along the upper Bollinger Band.
So you’ve got these stocks that are doing really well in the financial space. That’s different than we have really been seeing. And then you add to that the small-cap index ( NYSEARCA: IWM ) breaking out. And why is it doing that? Because the market is anticipating that the Fed is going to be cutting rates, which makes the cost of money lower, hence good for the small caps.
Now, will that ultimately be good for the broader market? I don’t think it’s as easy as you might think it is to say, Oh yeah, lower rates mean good for the market. Maybe, but maybe not. So it’s important for you to just be mindful of that. The bottom line is this, for the time being, for right now, I’m looking at this as something that you definitely want to be long the banks. You just do the XLF ( NYSEARCA: XLF ), if you can’t figure out which one you want, buy them all with the XLF ( NYSEARCA: XLF ), okay?
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