Sector Spotlight: Financial Sector (XLF) Not Ready For Primetime

• Posted by DynamicHedge
• on May 14th, 2011

This was the week that huffed and puffed and ultimately went nowhere.  The market disproved my notion that financials were a be a sector to watch for a change in tone and possible market leadership.  Financials remain completely broken until further notice with the exception of $V and $MA.

Winners: $WAG, $NKE, $AVP, $PG, $KFT, $MCD

Losers: $FCX, $OXY, $C, $GS, $MS, $JPM

Notice anything troubling here?  Former leaders are now consistently in the losing ledger and the winners are all defensive.  This is what corrective markets look like.  This isn’t just an anomaly anymore.  This price action should be cause for some concern.  How committed do you want to be to this market?  I’m even seeing some pockets of weakness in some healthcare (defensive) names like $UNH and $BAX.  The bears could actually be right for this summer.

Don’t lose sight of the fact that we are in an overall bull market.  This may be a time to keep some powder dry.  I do not believe for a minute that this market has put in its all time highs but we may be in for a bumpy ride along the way.  Remember, you’ve got all year.

Market Churn:

Winners:

Losers:

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