Investors are starting to see a major top being put in on financial stocks. Goldman Sachs Group Inc (NYSE:GS) is up 33% since early November 2016 and other financial stocks are not far behind. These insane runs are attributed to a hope that president-elect Donald Trump will get rid of Dodd-Frank reguation and allow these banks to become even more profitable. Whether true or not, the financial stocks have over compensated already, pricing in a heavenly picture that has no chance of coming to fruition. Smart money knows this and the selling has begun. I expect a 10% pull back in all financial stocks.
Goldman Sachs started with a surge higher in early trading. This has been the darling of all the banks as they have one current Goldman executive and one former Goldman executive, inside the White House, in the next administration. As the stock surged higher today, it all of a sudden hit a turning point. Big volume sellers emerged and pushed Goldman lower, reversing all the daily gains. The stock is now flat to positive on the day and may form a topping tail. This is an extra bearish top signal showing an overpowering of sellers, smacking the early buyers out of the way. Keep it on watch for a pull back to $212.00. JPMorgan Chase & Co. (NYSE:JPM) was never really able to spike higher like Goldman Sachs, instead seeing sell pressure from the start. Bank of America Corp (NYSE:BAC) held in a tight range early on extremely high volume. This was where small investors were buying heavily but institutions were selling heaviliy. This meant price moved very little until the small investor ran out of money. Then Bank of America started to slide lower.
The price action on all the major financial stocks screams institutional distribution. After 30% runs, there will be a sharp pull back in shares. Investors would be wise to sell any longs and buy shorts for a 10% retrace.