Bank Improvement Continues, Are US And Europe Next?

JC Parets
August 31, 2020

From the desk of Tom Bruni @BruniCharting

Another post on Banks? Yeah, we get it Bruni, they're underperforming and can't get their act together.

Well, hold on a second. What if I told you this isn't another post about that?

That instead we're looking at a chart which suggests that a breakout in US and European Banks may be ahead?

Now that I've got your attention, let's jump into it.

Here we're looking at four country's Financial Indexes on an absolute basis (blue) and relative to their broader market index (green). What we can see is that Indian and Canadian Financials have stabilized on a relative basis and have made new recovery highs on an absolute basis.

Meanwhile, US and European Financials have yet to make new recovery highs on an absolute basis and are pressing fresh lows on a relative basis.

Click on the chart to enlarge view.

This is a subtle, but important improvement in our view. This could be the market providing us the same type of information it did as stocks pushed to new highs over the last few months.

Remember what we were seeing then? More and more consolidations resolving higher, not lower. And we all know how that played out.

Now we're seeing more Financial Indexes around the globe break out.

That's information.

Combine that with the fact that 10-Year Yields in these countries are all trying to base and work higher, and we've got a solid case betting that the US and Europe follow India and Canada to the upside.

That's my view, but I want to know what you think. Are we onto something here? or are all Financial stocks doomed to eternal weakness?

Let us know.

- Bruni

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