Financials Outperforming So Far Today…Setting Up For A Trade

The finnies are outperforming today in a relativ basis.  Simply put as of right now the SPY is down 0.33% while the XLF (financials) is up 0.33%.

As I watched JPMorgan (JPM) and Bank of America (BAC) trade over the past few days I couldn't help but start to feel more and more constructive on the financials as a sector, at least for a trade here.  Looking at a few other financials charts then further told me that I might be on to something here.    Goldman Sachs (GS) is one chart that doesn's look good, at least not as compared to some of its peers

Let's take a technical look at the BKX Bank Index ETF:

The trading channel in place since February (blue dotted lines) bounced off the 200 day moving average and currently looks like it wants to break out of the channel.  This channel could also be looked at as bullish flag pattern, just so I said it.  Numerous banking stocks such as JPM and USB for example have similar patterns.   The XLF also doesn't look so different. In short, if BKX can hold 52 on a daily closing basis we will consider a trade to the long side.  

The chart of JPM as discussed above…don't look much different Sunny.

A break and daily close above $46 could trigger a rally to $48, the previous 2011 highs and a major multi-year resistance area.



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