The Big Bank Breakout

Financials represent our largest sector weighting on the equity side of the portfolios we manage for clients and they have since early January.

I’ve said recently that the biggest, most glaring inefficiency in the entire market right now – at least to my own eye – is the fact that bank stocks are the very cheapest on forward PE and at the same time are the primary beneficiary of a (slowly) rising rate environment. Financial stocks across all market caps are selling at a forward PE of under 7 right now while consumer goods and utility stocks sell at forward PEs of around 15.  I think the market has had this completely wrong but is in the process of coming around.

Bank of America Merrill Lynch’s technician Stephen Suttmeier got tactically bullish on the banks a few weeks ago. Yesterday he addressed the obvious big breakout for the sector (on an absolute basis) as well as the breakout relative to the rest of the market (not so obvious) which could become more widely observed should it continue…

S&P 500 Financials bullish confirmed by relative breakout
S&P 500 Financials broke out to a 5-year+ high within an up channel in place since May 2012. In addition, the sector has overcome the relative downtrend resistance from July 2013 within a revised channel on the relative…the next step is breaking above the Jan.’14 relative high to form a double bottom off the November and February relative lows – the completion of which would signal leadership for the Financials sector.

Screen Shot 2014-03-21 at 7.48.42 PM

Source:

US Financials and Banks show tactical leadership
Bank of America Merrill Lynch – March 21st 2013

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. smooth video transitions ccp commented on Sep 15

    … [Trackback]

    […] Find More Info here to that Topic: thereformedbroker.com/2014/03/23/the-big-bank-breakout/ […]

  2. sex commented on Sep 18

    … [Trackback]

    […] Here you will find 33538 additional Information on that Topic: thereformedbroker.com/2014/03/23/the-big-bank-breakout/ […]

  3. bitcoin loophole software commented on Sep 29

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2014/03/23/the-big-bank-breakout/ […]

  4. Bitcoin Era Review 2020 commented on Oct 01

    … [Trackback]

    […] Read More Info here on that Topic: thereformedbroker.com/2014/03/23/the-big-bank-breakout/ […]

  5. 토토사이트 commented on Oct 16

    … [Trackback]

    […] Find More Info here on that Topic: thereformedbroker.com/2014/03/23/the-big-bank-breakout/ […]

  6. is kalpa pharma good commented on Nov 13

    … [Trackback]

    […] Here you can find 34620 more Information on that Topic: thereformedbroker.com/2014/03/23/the-big-bank-breakout/ […]

  7. DevOps commented on Nov 19

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2014/03/23/the-big-bank-breakout/ […]

  8. mơ thấy ăn chuối chín commented on Nov 23

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2014/03/23/the-big-bank-breakout/ […]

  9. intelligent automation solutions commented on Nov 28

    … [Trackback]

    […] Find More Information here on that Topic: thereformedbroker.com/2014/03/23/the-big-bank-breakout/ […]

  10. sexy baccarat commented on Dec 17

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2014/03/23/the-big-bank-breakout/ […]

  11. td trust easyweb commented on Dec 24

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2014/03/23/the-big-bank-breakout/ […]

  12. rolex air king replica commented on Dec 30

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2014/03/23/the-big-bank-breakout/ […]