On a point and figure basis, are Financial stocks — and possibly the entire financial sector — the modern day Lazarus, rising from the dead?
This entire sector of stocks has been left for dead by the side of the road for well over three years. But their recent action is making us pay attention. We do not know if this is merely a bump along the way lower, or the start of something a little more positive. As in all cases, when the charts change, we will change.
But here is the most important take-away: some of these charts are starting to move back in positive trends. And the market has continued to move higher in recent months WITHOUT the participation of financial company shares.
If the financial sector is truly re-awakening, this market could — emphasize could — have a longer run ahead of it.
In this video, we take a quick peek at the charts of the following companies:
Citigroup (C)
Bank of America (BAC)
JP Morgan (JPM)
Morgan Stanley (MS)
Goldman Sachs (GS)
Barclays PLC (BCS)
BB & T (BBT)
USBancorp (USB)
Wells Fargo (WFC)
PNC Financial (PNC)
NY Community Bank (NYB)
Bank of NY/Mellon (BK)
Banco Santander (STD)
Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels.
All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions, or withdrawals may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for an investor’s portfolio.
If you are relying on a blog post for specific investment advice, you are making a huge mistake. Please speak with an investment adviser before making ANY investment decisions.
If you do not have an investment adviser, we encourage you to contact Mullooly Asset Management at 732-223-9000, or through our website. Under no circumstances should the content discussed here to be considered specific investment advice.
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April 16 2012 Update
by Thomas Mullooly on April 16, 2012
I was so focused on getting to the market update in the video, I completely overlooked the very FIRST chart in the video (scroll down for the video below)!
The chart (below) is the VIX Index as of April 16, 2012. You can click it to enlarge it. The “VIX” is the volatility index, sometimes called the “fear” index.
While the market has been rising the past three months, the VIX had been churning. The VIX initially dropped to start 2012, and traded in place between roughly 16 and 20 for most of January, February and into mid-March. However, the move in April at $17.50 broke the overhead resistance line and pushed VIX into a positive trend.
So, apparently, volatility is coming back in vogue. The chart has now risen and is very close to approaching the spread quadruple top (highlighted in yellow). If the VIX were to break above 21 (a break occurs at $22), we can expect escalated volatility. Doesn’t mean it will happen!
Point and Figure Chart of VIX on 4-16-2012
It’s also interesting to note that this chart is now in a short term positive trend. Looks like the “quiet weeks of mid-January to mid-March” may be a memory.
On my mind:
While the VIX is not a market indicator I use as a deciding factor when managing your money, it’s not helpful to see a move like this.
There’s also the “sell in May and go away” mantra. This could be kicking in, but the indicators would need significantly more deterioration (as we saw in 2010 and in 2011) to really register.
There is also a report of an informal “Presidential Election” year pattern (not the Presidential Cycle often quoted from Stock Traders Almanac). This Presidential Election Year activity historically shows a pull-back in April (right on time), then a rally into the November election (assuming the market LIKES the leading Candidate). We’ll see.
Remember, when the charts change, we WILL change.
Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels.
All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions, or withdrawals may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for an investor’s portfolio.
If you are relying on a blog post for specific investment advice, you are making a huge mistake. Please speak with an investment adviser before making ANY investment decisions.
If you do not have an investment adviser, we encourage you to contact Mullooly Asset Management at 732-223-9000, or through our website. Under no circumstances should the content discussed here to be considered specific investment advice.
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