Earnings season kicks off with Financials next week - spoiler - the sector is already rallying, on decent volume. Money managers started pumping banks over a week ago, but that doesn't mean you've missed the boat entirely - just means you're a little slow. This rally can continue straight into Friday, October Options Expiration, and even into the holidays. Merry Christmas! 🎄
Here's something you didn't know: Insurance companies (also financials) led yesterday's bull parade, and as far as I can tell, no networks covered it (crickets) - $KIE S&P Insurance ETF ended the day +1.71%.
Where did the money come from to fund that trade? - It came straight out of technology stocks ($XLK down 1.79%) - no surprise - [link to yesterday's blog] - this is the exact pivot we were expecting. We also saw money come out of crypto markets btw. $VIX managed to spike to 16.46, as if it was only a test.
Tech Stocks Teeter Financials Totter - Welcome To The Funhouse
Think of the current market as a seesaw: Financials are pumped on one side, as tech declines. This morning we're seeing technology leading again, as if nothing ever happened, and none the wiser.
$XLF Financial Select Sector (heavily traded) - being added to the public charts hub [link]. Not because I think you should trade it, but because this is what every talking head is going to be pumping next week. I'm also curious to see if I gain more followers, when I tap into the current narrative (bank earnings). Maybe the algos will even follow me? Sure financials can pop, and when it pops back above the 20 day SMA, buy signals will be triggered...
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I'm not planning to trade financials,but that could change
I see better trades - provided by Gemini/AI. Took a couple simple prompts...
Top Declining Industries Over the Past 2 Months
| Industry Sector / Sub-Sector | Past 2-Month Sector Performance | Primary Industry Headwinds |
|---|---|---|
| Independent Power & Renewable Electricity | -27% | Financing costs and regulatory uncertainties surrounding green energy infrastructure. |
| Construction & Engineering | -24% | Project backlogs and shifting industrial capital expenditure priorities. |
| Entertainment | -23% | Lower consumer discretionary spending and media valuation pressures. |
| Ground Transportation | -21% | Volatile logistics networks and rising operational expenditures. |
| Electrical Equipment | -20% | Supply chain normalization following prior AI and grid-electrification spikes. |
| Broadline Retail | -19% | Shifting consumer behavior and lower domestic consumer confidence. |
Sure, Financials have been beaten up pretty good over the past 2 months, and every money manager on Wall Street is telling you they like the setup, but AI just told you there are better trades to be had.
Homework: Homework: Build a folder for each sector. Chart a few timelines, bullish and bearish, then cross-check those against the leveraged ETF and the earnings calendar. Market movers only. I keep separate folders for indexes, ETFs, leveraged ETFs, and individual names — try 50 if you want to live in the weeds with me. That is why the public list only gets half a dozen lousy charts. 🤣😂
As you can already see; it's a complicated trade, and the technical charts are just as complicated. Way too complicated to start uploading a boatload of charts to the public charts hub. To try to explain all the different technical aspects I'm seeing - across a multitude of charts - to a group of inexperienced investors, is a fool's errand. But at the end of the day, it only takes 1 chart to trade financials. Nevertheless, it's a sector that's definitely worth keeping tabs on. This sets the stage for consumer health, lending, and the entire earnings season.
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