I'm still bullish Financials, for now at least. Macro data is still showing growth and inflation rising (quad 2) but we will run out of runway on that as we move into 2nd half of the year proper.
Momentum is still to the upside, and may have bottomed for now. Also, we are rising on lower volumes last couple of days.
XF financials/banks ETf on the brink again as it strains to maintain the 2 year+ uptrend from early 2016. Close below 27 area could lead to a swift 8%-10% more downside.
Leading the market lower post FOMC as 10s-2s yield curve flattens further
Remaining short. XLF looks like it is heading lower still. Break of trend and 200DMA support suggests $25 on a close below $27. FED continuing to raise rates with no meaningful inflation reinforces US curve flattening, and damping loan demand, negative for banks.
If you expect an uptick in inflation like I do in the US, the Financials could be a good way to play this.
With USD down more than 10% this year, commodities having risen by more, and continued labour market tightness, inflation could surprise to the upside over the next few months and $XLF could be the proxy to play this, rather than being short bonds - which...
We have updated our monthly publication - US Sectors Relative to S&P500.
It is an overview of the major US sectors, and covers, amongst others, Consumer Discretionary, Consumer Staples, Energy, Healthcare, Technology and Financials.
Within several ratings changes, we have Downgraded Financials to Underweight.
On an absolute basis, the US Financials ETF XLF is...