So far this year, financial stocks have been hot.
The XLF Financial ETF has risen by more than 17% during that time, which is about twice the amount of the constituent stocks of the Standard & Poor’s 500 Index.
Matt Maley, chief market strategist at Miller Tabak, said the stock may succumb to some short-term weakness after a rebound.
“They have become very, very overbought a few weeks ago.” Marley told CNBC̵
The RSI trading price of XLF ETF is 72, which is an overbought state that has not appeared since January 2018. Any reading above 70 indicates that the asset is overbought.
Marley still said that for financial institutions, long-term arrangements look very strong.
“The 50-week moving average is very close to the 200-week moving average. In other words, every week is very close to the golden cross. On the chart, the golden cross tends to be bullish daily, but when you get it once a week, the situation is even more so So. In fact, we haven’t seen one of these crosses since 2012,” Marley said.
Marley added: “At that time, we also saw a big rebound. When the Golden Cross happened, it further expanded the rebound in the next few years.”
When the 50-period moving average moves above 200 periods, a golden cross is formed. This is a bullish pattern and indicates that the uptrend is accelerating.
From June 2012 to its peak in August 2015, the price of XLF almost doubled. Marley said he will seek to buy the group at a disadvantage, while paying attention to whether he sees a golden cross on the chart.
Federal Hermes (Federated Hermes) portfolio manager Steve Chiavarone also bet on the long-term strength of the financial industry. He said that rising interest rates and the reopening of the economy should trigger more gains.
“When you encounter a frustrating situation like certain cyclical factors, and your financial situation is frustrating, you can take great steps, but you will not return to the state before the crisis. I Think this is the possibility of this happening. Financial situation.” Chiavarone said in the same interview.
After reaching its peak in February 2020, XLF fell 44% in March, reaching a trough.
“You will get a lot of stimulus through the system, and this is more likely to happen, which puts upward pressure on interest rates. We believe that the 10-year period will reach the level of 2% this year. We think this is indeed a very good further The sloping yield curve…I think the fundamentals of the financial industry are still very strong, and we will use any weaknesses to increase our holdings in the region,” Chiavarone said.