• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Financials’ Strong Week Lifts Them to Within a Whisker of an All-Time High
Stock

Financials’ Strong Week Lifts Them to Within a Whisker of an All-Time High

by March 2, 2025
by March 2, 2025 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Many are watching the disaster in growth stocks unfold, including us at EarningsBeats.com, but the reality is that many other areas of the stock market represent a silver lining. When growth stocks sell off, essentially two things can happen. One, the rest of the stock market sells off as well, indicative of pure market distribution. These types of selloffs can lead to large corrections or even bear markets. The second type of growth stock selloff can be much more bullish in nature, as money simply rotates from very overbought growth stocks to much more reasonably-priced value stocks for a brief period of time. The former represents a necessary departure from current bullish trading strategies. The latter represents a need for patience. I want you to look at last week’s performance by sector and decide if the selling was more like across-the-board distribution or simply bullish rotation like we’ve seen many times over the past 12 years of this secular bull market advance:

7 sectors rose last week while only 4 declined. It was absolutely NOT a case where everything was selling off. It may morph into that type of market environment, but that’s not what we saw last week. Remember, the NASDAQ was down more than 5% last week, before Friday’s rally kicked in. That 5% drop was over and above the huge Friday drop just prior to last week. The cumulative drop on the NASDAQ 100 from its all-time high was 8%, not far from correction territory, which is considered a drop of 10% or more, but less than 20%. Options expiration may have triggered the start of this 8% selloff, but it was unlikely the only reason.

A week ago Friday, there was a turning point in the stock market short-term. Money rotated very heavily, on an intraday basis, away from aggressive areas like consumer discretionary (XLY) and into defensive, value-oriented areas like consumer staples (XLP). Part of this shift can be attributed to monthly options expiration in February as there was a TON of net in-the-money call premium on key stocks like NVDA, META, PLTR, etc. Nonetheless, it was the 10th-highest bearish distribution day (between the XLY and XLP) since the financial crisis bottom in 2009. The other 9 all occurred during either cyclical bear markets or during corrections. Will this 10th occurrence be any different than the previous 9? The takeaway here is that those types of massive distribution days are NOT normal and should give us bulls reason to pause. They don’t occur very often, thankfully.

But let’s get back to that sector rotation last week and take a look at financials (XLF), specifically, which gained 2.82% for the week and closed one penny below its all-time closing high of 52.19. The top-performing industry group within financials was full line insurance ($DJUSIF), which broke out of a lengthy period of consolidation, as you can see below:

Bullish momentum is accelerating, as evidenced by the rising daily PPO. Yes, we’re overbought with an RSI at 74, but overbought can remain overbought for a period of time. This is a bullish continuation pattern (uptrend followed by sideways, or rectangular, consolidation) breakout and, outside of a possible brief pullback, I’d look for higher prices down the road, ultimately reaching a measurement target of 88-89. I’ll be featuring a full line insurance stock in our Monday morning EBD that is in position to benefit from this industry group breakout. If you’re not already a subscriber to our FREE EB Digest newsletter, you can CLICK HERE to subscribe.

Happy trading!

Tom

You Might Also Like
  • The Elders Both Fatigue: Grandpa Russell 2000 v. Granny Retail
  • Sentiment And Small Caps Are A 1-2 Punch, Knocking Out The Staggering Bears
  • A Half Point Fed Rate Cut? The Stock Market Thinks So
  • S&P 500 Breaks Key Trendline as Growth Stocks Plunge
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Soaring egg prices are threatening a classic holiday tradition: Easter dye kits
next post
Musk says he’s sending Starlink tech to FAA while asserting, without evidence, that air safety is at risk

You may also like

Stock Indexes Continue Winning Streak: Growth Stocks Still In the...

November 9, 2023

Three Ways I Use RSI To Analyze Trends

September 2, 2023

Unleash the Power of BPI: The Key to Boosting Your...

February 20, 2025

How to Find the Best Stocks to Trade: It’s About...

April 5, 2023

Small Caps Are Ready To Launch!

May 23, 2023

MEM TV: Tech Stocks Blast Higher! S&P 500 Bull Market...

January 22, 2024

Uncover the Week’s Key Stock Market Movements

March 22, 2025

Regional Banks — From March 6th to March 9th

March 10, 2023

These Signals Will Improve Your Timing!

March 14, 2024

Week Ahead: NIFTY Defends Key Supports; Upside May Stay Capped...

April 1, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Find Highest Probability Counter-Trend Setups

      June 25, 2025
    • Small-business AI use is lagging, but one firm is channeling Sherlock Holmes and knocking out ‘grunt work’

      June 25, 2025
    • Nvidia CEO Huang sells $15 million worth of stock, first sale of $873 million plan

      June 25, 2025
    • Shifting Tides in the Stock Market: A New Era for Bulls?

      June 24, 2025
    • How to Use Fibonacci Retracements to Spot Key Levels

      June 24, 2025

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 3,611 views
    • 2

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,893 views
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,586 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,549 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,427 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,148)
    • Investing (538)
    • Stock (2,631)

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 2

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Find Highest Probability Counter-Trend Setups

      June 25, 2025
    • Small-business AI use is lagging, but one firm is channeling...

      June 25, 2025
    • Nvidia CEO Huang sells $15 million worth of stock, first...

      June 25, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,148)
    • Investing (538)
    • Stock (2,631)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    New Tables Show That Intermediate-Term Overview...

    September 28, 2023

    What’s the Downside Risk for QQQ?

    March 15, 2024

    Swenlin Trading Oscillators Trying To Turn...

    August 22, 2023
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here