Seeking Alpha

Dow near record and struggling bank stocks don't add up

  • The KBW Bank Index (ETF: KBE) is off about 8% from early April, with the performance of high-profile members like BofA, JPMorgan, Citigroup, Goldman is even worse (though Wells Fargo remains close to an all-time high).
  • It used to be, writes Michael Santoli, bank stock action was key to gauge the broader health of the market, but few are fretting now. Instead attention is being paid to the slides in the Russell 2000, high-flying growth names, and Treasury yields.
  • Rather than saying anything about the economy, the drop in bank shares could be more about thinning out an easy trade (long) that got too crowded. The latest BAML fund manager survey shows pros as big sellers of bank names in the last few weeks, dropping their allocations to a 10-month low. Even with the selling, their exposure to the sector remains far above the national average.
  • ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, PFI, FXO, FNCL, KBWB, RKH, QABA, FINU, KRU, RWW, KBWR, RYF, PSCF, FINZ, KRS
Comments (1)
  • Izzy1
    , contributor
    Comments (179) | Send Message
     
    Obviously this is a strange market. Economy going nowhere but DOW and S&P continue to hit new records. Investors and traders putting money into market because they believe economy ready to take off.
    If we continue to get so so economic data investors will pull back and I could see market drop at least 20%. Maybe the banks are smarter then the rest and they are already pulling back. Housing in trouble, consumers not buying and CEO's not investing. Danger ahead
    16 May, 03:09 PM Reply Like
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