Financial Stocks – What are They Telling Us Now?

financial stocks

In 2007 the financial stocks started breaking down and did not confirm the indices’ new highs in October.  And in 2000 they didn’t confirm the Dow Jones Industrial Average (DJIA).  However, markets never play out exactly the same way.

The Federal Reserve raised the Federal Funds rate in December 2015 for the first time since 2006.  They have since raised 3 additional times. The last in June of this year.

So now, 8 1/2 years after the markets bottomed in the Financial Crisis, the Fed Funds rate stands at 1.00-1.25%. This is the same level that it was after the Fed cut rates to 1.00% on October 29, 2008.

By the way the Fed didn’t start using a range for the Fed Funds until December 2008 when they cut the rates to zero.  I think they didn’t want to just say the rates were zero so they created a range…0.00-0.25%.

So after 8 years of economic recovery, interest rates are no higher than they were when panic was rampant and the economy almost completely went over the cliff.

But financial stocks have risen along with the rest of the stock market. So much for the financials needing higher interest rates in order to do well. Maybe you float enough money around the globe everything rises.

In the past financial stocks gave us clues that all was not quite right with the system. So what message are they telling us now?

In today’s brief market update video I review the DJIA daily and weekly charts, check the VIX and then analyze the Financial ETF (XLF) and 3 major banks: Bank of America (BAC), JP Morgan Chase (JPM) and Citigroup (C).  Video is a very brief snippet of what is provided to my Insider Members.

 

 

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