Monday, July 5, 2010

Financial Sector Internals

The Financial Index ETF (XLF) looks like it is holding up well. But what is really going on inside the Financial Sector?



Broker Dealers ($XBD), Regional Banks (RKH) and Asset Managers (DJUSAG) have failed to hold key support and bellwether GE has also failed at support.






Broker Dealers

Take a look at the charts of Morgan Stanley (MS) and Goldman Sachs (GS). Nothing bullish here, with price < 50-day < 200-day. Those are Bear Markets.




Regional Banks

The charts of Bank of America (BAC), JPMorgan (JPM) and Wells Fargo (WFC) have broken key support.
Smaller regional banks like BB&T (BBT), Regions Financial (RF), Keycorp (KEY) and Suntrust (STI) have broken support.
PNC Financial (PNC), Fifth Third Bancorp (FITB) and Huntington Bancshares (HBAN) are holding on for dear life.



Asset Managers
Look at the charts of T Rowe Price (TROW), Janus (JNS), Franklin Funds (BEN), Federated Investors (FII), Waddell & Reed (WDR), Eaton Vance (EV) and Cohen & Steers (CNS). What do you think they are telling you about future fees in the Asset Management business?



Discount Brokers
The charts of Charles Schwab (SCHW), Ameritrade (AMTD), E*Trade (ETFC) and Stifel (SF) are all telling me that the markets are expecting trading volume to diminish significantly. I assume that most people like for buy long, so that would not be a bullish indicator for the markets.



I don’t know how to categorize these, but look at the charts of State Street (STT) and Northern Trust (NTRS). State Street peaked last October and Northern Trust is actually at the lows of the Bear Market!



Why are the banks important? Because every single one of them has the capacity to blow up the entire financial system with their exposure to derivatives. I haven’t posted this chart in a long time, but it is clear that the Derivative nightmare has never been address and may still come back to haunt us.

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