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January 17, 2025

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The Financial Sector’s Bullish Comeback: Is It Time to Start Looking at Bank Stocks?

5 Mins Read

One effective way to spot potential market opportunities on a sector level is to regularly monitor  Bullish Percent Index (BPI) readings for each sector. Sector-focused BPIs tell you the percentage of stocks generating Point & Figure Buy Signals. From that point on, you can drill down to specific industries to find ETFs or stocks presenting tradable opportunities.

On Wednesday morning, following an encouraging CPI report and a strong kick-off to quarterly bank earnings, the BPI for the financial sector ($BPFINA) dramatically rose.

FIGURE 1. BPI FOR FINANCIAL SECTOR ($BPFINA). After a selloff, 56% of stocks in the financial sector triggered P&F buy signals.Chart source: StockCharts.com. For educational purposes.

After hovering above the 70% line for months, a threshold that signals potential overbought conditions, $BPFINA declined in December, falling short of touching the “oversold” threshold of 30%. On Wednesday, it jumped above 50%, a line that favors the bulls as it indicates that over 50% of stocks within the sector are generating P&F buy signals.

In addition to a tempered CPI report, one which followed a similar PPI reading from the previous day, strong bank earnings were a key driver behind Wednesday’s dramatic market rally, particularly the big players: JPMorgan Chase (JPM), Goldman Sachs (GS), Wells Fargo (WFC), and Citigroup (C).

Let’s use PerfCharts to compare the SPDR S&P Bank ETF (KBE), our bank industry proxy, to these four names. KBE provides an equal-weighted representation of small-, mid-, and large-cap bank stocks, giving a wider context to view relative performance.

FIGURE 2. PERFCHARTS OF KBE, JPM, GS, WFC, AND C. Note that all four banks are outperforming KBE.Chart source: StockCharts.com. For educational purposes.

This quick view tells you that in the last year, the “big four” have been outperforming the broader banking industry. Wells Fargo and Goldman Sachs are leading the pack, followed by JPMorgan Chase and Citigroup.

Suppose, however, you wanted to take a diversified position by going long KBE, anticipating the possibility that the banking industry might see a favorable year, especially under the new White House administration. Take a look at a daily chart of KBE.

FIGURE 3. DAILY CHART OF KBE. After losing bullish momentum, KBE is at a juncture that is neither definitively bullish nor bearish. Chart source: StockCharts.com. For educational purposes.

Here are a few key observations about the chart:

  • The ZigZag line clearly shows the swing points identifying when the uptrend and near-term downtrend were broken (remember, uptrend = HH and HL, and the opposite is true of a downtrend).
  • The orange circles highlight the nearest swing low and high points, both of which were breached, making the near-term uptrend or downtrend uncertain at this time.
  • For the downtrend to resume, KBE would have to fall below $53, the November low (see blue dotted line) that served as support.
  • For a new uptrend to take place, KBE must stay above $53 and eventually break above potential resistance at $58 (see red dotted line) before challenging the two November highs.

In short, it’s a wait-and-see moment. If you entered early, a stop-loss below $53 or any of the consecutive swing low points (see ZigZag) can be helpful.

If you’re considering investing in individual banking stocks, among the four big banks reporting outstanding earnings results, Citigroup made a new 52-week high. I identified this using the StockCharts New Highs Dashboard panel.

FIGURE 4. NEW HIGHS TOOL. Citigroup made a new 52-week high on Wednesday morning and is worth a closer look.

Let’s take a closer look. Below is a daily chart of Citigroup.

FIGURE 5. DAILY CHART OF CITIGROUP.  A steady uptrend culminating in a bullish yet parabolic jump.Chart source: StockCharts.com. For educational purposes.

A couple of main points:

  • Citigroup saw a tremendous jump Wednesday as its Q4 earnings beat Wall Street’s expectations; analysts’ fundamental targets have been revised to as high as $102, with $80 as the median price target.
  • The Relative Strength Index (RSI) barely entered overbought territory (see orange circle), indicating strong momentum.
  • The Accumulation/Distribution Line (ADL) is recovering after a prolonged drop in money flows.
  • The On Balance Volume (OBV) shows significant buying pressure.

As Citigroup makes new highs, its parabolic move may be countered by a slight pullback. If so, the scenario is straightforward. If you look at the ZigZag lines and the support levels of the two most recent swing lows (see dotted blue lines), you can identify the prices that, if broken, could call the stock’s uptrend into question.

These levels, both of which should serve as support, are especially critical for any trader who has opened a long position. Also, monitor the $74 range that coincides with the last two consecutive swing high points. While these highs are near the current price, they could still act as a support level if the stock pulls back.

If you’re looking to enter a position, it may be wise to wait and observe how the price reacts to any of the support levels before deciding to go long. If the price falls below these levels, additional support could emerge at subsequent swing lows. However, in the case of a significant reversal, you would need to reassess the trend to determine whether support levels represent buying opportunities or merely temporary rally points in a bearish trend.

At the Close

Financials are showing signs of recovery and renewed momentum, with $BPFINA crossing a key bullish threshold. Strong bank earnings are driving market sentiment, with  Citigroup making a new 52-week high.

What to do: Add Citigroup to your ChartLists. Use a basic support and resistance perspective to guide your decisions and watch the swing points to determine the status of the trend.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

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In World news

Russia’s growing ties with Iran have shaped the war in Ukraine. A new treaty will raise the stakes for Trump’s administration

5 Mins Read

Just three days before US President-elect Donald Trump returns to the White House, Russia and Iran are set to finally sign a “comprehensive partnership agreement,” a deal that’s been in the works for months.

It’s a move that will refocus attention on a partnership that has shaped the battlefield in Ukraine, and which remains committed to challenging the US-led international order – even as the new US administration promises greater engagement with Russia.

Russian and Iran share a complicated past, peppered with conflict, and even now tread a fine line between cooperation and mistrust. And yet, the war in Ukraine has pulled Moscow and Tehran closer.

In July 2022, five months into his full-scale invasion of Ukraine, Russian President Vladimir Putin visited Tehran, his first wartime trip outside the former Soviet sphere.

Behind the photo ops and handshakes, his “special military operation” was not going to plan. His army had lost a lot of its initial gains as it was pushed out of the Kyiv region – and would go on to lose more later that year in two further successful Ukrainian counteroffensives.

Those drones have formed the backbone of Moscow’s attritional war, swarms of them – targeting civilian areas and energy infrastructure in an effort to break the resolve of Ukraine’s people and deplete its air defenses.

Moscow has also, according to the US, taken delivery of Iranian ballistic missiles – and while no evidence of their alleged deployment has surfaced yet, that news alone sent a strong signal to Ukraine’s allies that Putin was willing to escalate.

Less desirably for Moscow, it was also one factor that helped shift the debate around providing Ukraine with permission to fire Western-supplied long-range missiles at military targets in Russia. Several prominent Russian military bloggers claimed in early January, without providing evidence, that Iranian missile launchers and other equipment were being delivered to Russian military training grounds ahead of the deal’s signing.

Two-and-a-half years on from Putin’s Tehran visit, the dynamic has markedly shifted for both sides. Russia now has the advantage in Ukraine. It is gaining territory on the eastern front, and with the help of North Korean soldiers, slowly pushing Ukraine back in the Russian region of Kursk. The incoming Trump administration, to Moscow’s barely concealed glee, wants to start talks, and is making noises about letting Russia keep the territory it occupies, and stalling Ukraine’s bid for NATO membership.

Iran, meanwhile, is feeling decidedly less secure. Nikita Smagin, an independent expert on Russia and Iran, who worked for Russian state media in Tehran before the invasion of Ukraine, says the Pezeshkian administration is rushing to get this treaty signed with Russia amid multiple threats to its security.

“They are frightened by the Trump administration, they are frightened by Israel, they are frightened by the collapse of Assad, the collapse of Hezbollah,” he said, explaining that Iran is looking for a show of support.

Moscow may look to exploit this. The Russians have “a great nose for somebody in trouble,” said Alterman, and may be thinking “we can help them a little bit, but we can get them where we need them and extract more from them that we want.”

What more Russia wants is less clear. It has now indigenized Shahed production on Russian soil – and having paid its dues to Iran under an initial franchise deal to manufacture them, is now doing so with much less direct Iranian involvement.

Russia’s recent battlefield gains have come at a huge cost to its troops – so while its manpower issues are nowhere near the level of Ukraine’s, it could use more boots on the ground. But experts are skeptical Iran would be as amenable in this regard as North Korea, which has deployed around 11,000 of its troops in Russia’s Kursk region, according to Ukrainian and Western assessments.

“Even when Iran is fighting their wars outside Iran, they are not willing… to sacrifice their soldiers,” said Smagin, “and when we’re talking about Iran and Russia there is a very big background of distrust from the Iranian side to Russia.” And Russia may be wary of any mutual defense pact, given the more immediate threat to Iran from Israel.

“I think this is partly intended as a message to the Trump administration that we each have options,” said Alterman. “I think the Iranians are looking for tools they can use with the Americans… and there’s a sense that this gives them something to trade or something to talk about.”

Iran, facing the prospect of a possible revival of UN sanctions that were lifted under its 2015 nuclear deal, is urgently looking for ways to persuade the US to rejoin that deal, which Trump exited in 2018 – or restart negotiations.

For Russia, a new treaty with Iran – a country which might be closer than ever to being capable of producing a nuclear weapon – may be partly about dangling the specter of further escalation before a new US administration that it sees as less committed to Ukraine.

“The Iranians certainly have some worrying capabilities, the Russians certainly have demonstrated a willingness to use worrying capabilities,” Alterman said.

This post appeared first on cnn.com

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In Business

Citibank customers report fraud alerts and account access issues

1 Min Read

Numerous Citibank customers reported receiving fraud alerts and having difficulty accessing their accounts Wednesday.

According to DownDetector.com, which tracks reports of digital services interruptions, hundreds of Citibank users had flagged issues related to their accounts as of midday.

The site indicated the interruptions had been occurring since at least 9 a.m. ET.

Some customers reported on X that they received fraud alerts and subsequently experienced long hold times with the bank’s fraud department. Others said they couldn’t access their mobile accounts.

A Citi spokesperson said the company is ‘experiencing some technical issues with Citi’s mobile app experience, which we are working quickly to resolve. For servicing needs during this time, customers can still log in at Citi.com or call the number on the back of their cards or on their monthly statement.’

Bank representatives were responding to complaints on social media earlier Wednesday afternoon, with one writing on X, ‘We are currently working on this and ask that you try calling in another 1-2 hours.’

On Wednesday morning, Citi reported financial earnings that beat analysts’ expectations, with multiple business segments posting record revenues.

This post appeared first on NBC NEWS

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