The One That Matters

March 23, 2023

We don't have bull markets without Financials.

Go back and check for yourself.

So this one, by definition, has to be the chart that matters the most.

Look at the Financial Sector Index currently retesting its former highs from before the Great Financial Crisis:

One can argue that this is now the 3rd test of that level after a few successful go arounds last summer.

The problems start if Financials are below those former highs.

Part of the reason we've been buying stocks since last summer was because Financials showed an ability to hold their key levels.

So why wouldn't we be buying equities?

And that worked out very well for us.

But now what?

What if Financials break?

Well, from my point of view, a lot more risk is on the table if Financials are below those 2007 highs. It's that simple.

The world is not coming to an end if the $XLF is holding above it's pre-GFC peak.

But only bad things can happen to equities as an asset class while Financials below it.

We already discussed this all on our LIVE Video Conference Call earlier this week.

It's all in there. I still believe the bull market thesis both begins and ends with this chart right here.

Give it a watch and let me know if you have any specific questions about how we're approaching the market now.

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