Tracking Money Flow in Financial Stocks

Includes: AIG, BAC, C, JPM, WFC, XLF
by: Brett Steenbarger

The last time we visited the Financial sector, we found waning adjusted relative dollar volume flows leading up to the late February/early March decline.

Since that time, we can see that 10-day flows (pink line) have returned to above average (red line), but that the sector price of Financial Select Sector SPDR (NYSEARCA:XLF) (blue line) has yet to register fresh bull market highs.

The five highly weighted stocks within XLF that I use to compute the dollar flows are Citigroup Inc. (NYSE:C), American International Group, Inc. (NYSE:AIG), Bank of America Corporation (NYSE:BAC), Wells Fargo & Company (NYSE:WFC), and JPMorgan Chase & Co. (NYSE:JPM). Together, they account for about 36% of the index.

XLF vs Dollar Flow For Financial Stocks

Of these five, only BAC is showing a 10-day level of flows below its 200-day moving average. Those flows are still quite positive, however. The strongest inflows are occurring within AIG, which seems to be attracting significant institutional interest. There is absolutely no sign of money fleeing this sector, as flows for all the stocks are strong.

As long as we have expanding dollar inflows to the Financial stocks, I expect price to continue higher. We normally see some tailing off of those flows prior to any significant correction. While XLF has been underperforming other S&P sectors of late, it has still been quietly accumulating institutional assets.