Financials' Downtrend Intact

Financials are back to the extreme oversold levels seen in January and August of last year. As shown below, only 3% of the stocks in the S&P 500 Financials sector are above their 50-day moving averages, and the price of the index is now trading well below the bottom of its trading range.

While there aren't many positives out there right now, when things get this oversold, prices tend to bounce in the short term. With the sector trading at the bottom of its downward channel, we could see it rally to at least the top of the channel in coming weeks.

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