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Financial Stocks Look Solid

The financial stocks have been under a ton of pressure of late but just in the last few days look to be turning higher.  While this move higher may be short lived, it is none the less a positive sign.  This bounce may last until after the Labor Day holiday in early September if the double bottom on the Financial Select Sector SPDR (ETF) (NYSE:XLF) holds.  Note the chart below.

Other stocks have also hit major levels. JPMorgan Chase & Co. (NYSE:JPM) came into a solid double bottom, Wells Fargo & Company (NYSE:WFC) formed a beautiful bottoming tail on the daily chart (bullish signal) and Bank of America Corporation (NYSE:BAC) hit major support at $12.50 while also showing a reversal signal yesterday on the daily chart. These signals tell traders to look for a move up in the short run.  Over the long run there is little hope these will continue up however. Short term swing trades both long and short seem to be best as the market continues to whip back and forth.

The financial stocks are mostly trading higher today while the broader market is flat to lower.  Keep a close eye on the revised GDP tomorrow and the Ben Bernanke speech. Next week will be light as the market moves into the holiday weekend of Labor Day.  In addition, all week the markets will look forward to the Unemployment and Non Farm Payrolls report.

Gareth Soloway
Chief Market Strategist