Financial Companies Key to Next Market Move

The market is always in a state of flux, and investors are always looking for the next big move. While nobody can predict the future with certainty, there are some key indicators that can give us a glimpse into which way the market might be moving. Financial companies are one such indicator and their performance is shaping up to be a key factor in the next market move.

Take a look at the chart below, financials have declined to a very important price. They are now down to where the market offered resistance (and eventual declines) in early 2018 and 2020. It’s also where the market paused a little during the recovery in late 2020, and early 2021 before breaking out of that resistance to new highs. Over the last couple of weeks, financials have also been testing the 200-week moving average which offered support in late 2018.

Financials going up doesn’t have to happen in order for the broader market to move higher, however, it can be seen as an indicator of the confidence level the economy has in avoiding a recession and entering a period of time where financials typically struggle. For the last few weeks, the bulls have been coming in and buying, offering the support we’re looking for. Holding that line in the coming weeks is going to be an important factor if the broader market wants to start inching higher.

Shean

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.