Financial Sector's Best Week in Years

Here's an interesting chart. This shows the S&P Financial Index (^SPSY) divided by the S&P 500:

There are three major low points. The first is from October 29, 1990 (0.1533). The next came nearly ten years later on March 9, 2000 (0.1927). This was not simply a reflection of financials going down, but of tech going way, way up. The most recent low came last Tuesday, July 15, 2008 (0.1910).

What's fascinating is that the last two lows hit almost exactly the same. Does this mean that financials are ready to turn around? It's too early to say, but the sector has just had one of its best weeks in years.

Comments

[richrdinbel...:]

The five day Freddie and Fannie Rescue Rally leaders are financial, IYF, 24%, home construction, ITB, 24%, India, 20%, and Retail 11%.

Everything that is debt, has debt, and is consumer based has rallied strongly over the last five days; and thus is totally unsustainable.

In the linked article, I preseent a number of factors suggesting an immediate downturn; and present short selling suggestions as well as present a case for investing in gold.

2008 Jul 23 09:17 AM