Financials in Focus

From the Desk of Alfonso Depablos @AlfCharts

As equity markets continue to repair the damage from April’s correction, we continue to find more and more stocks -- and groups of stocks -- that we want to be buying.

A growing number of those groups are coming from the financial sector. 

Financials have made a comeback in the last week as a handful of financial indexes and individual issues are reclaiming their prior-cycle highs.

The relative trends are improving as well, with the large cap sector SPDR $XLF hitting new 52-week highs versus the S&P 500 recently.

When we think about the strongest stocks within financials, asset management and capital market stocks are top of mind.

In today’s post, we will dive in and outline some of our favorite charts in the space.

Before we do that, here’s the SPDR S&P Capital Markets ETF $KCE pressing against its former highs from 2021:

If and when KCE breaks through this resistance, we expect a strong reaction leg higher. We think it happens any day now.

If we’re above 110, the bias is higher for the whole group. 

While we can always express a bullish thesis at the index or sector level via ETFs like KCE, the real alpha is generated by owning the best stocks in the peer group. 

Here’s our capital market and asset management scan, sorted by percentage from the prior-cycle highs:

Click on the chart to enlarge the view.

The reason we sorted this way is because we know these stocks are leaders if they are above their 2021 bull market highs.

Here are some of our favorite charts in the space...