Friday, October 17, 2014

Some bullish signals from the US financials:

I have learned that (thanks to the great Ian Notley) – no bull market can operate without the leadership – or participation from the financial sector of stocks. This rule would apply to most of the mature global equity markets.

Now according to Sector SPDRs the SPDR Select Sector Financial (XLF) is a wide array of diversified financial service firms are featured in this sector with business lines ranging from investment management to commercial and investment banking. Among the companies included in the Index are JPMorgan Chase, Wells Fargo, and BankAmerica Corp. Currently the top weight is Berkshire Hathaway B (BRK.b) at 9.0% followed by the usual suspect banks and then Goldman Sachs Group Inc, (GS) at 2.6%.

Note the chart displaying Berkshire – weekly above Goldman – weekly plotted with their respective 10  & 40 week simple moving averages – clearly both still trading above a rising 40 week (or 200 day M/A) – so there is no break in these bellwethers. By the way both lead us out of the 2008 financial crisis with the Berkshire bottom in Feb 20, 2009 and the Goldman bottom in November 21, 2008 

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