≈ Can financials take us higher?≈
Earnings season is upon us, and, as usual, banks are leading the charge. JPMorgan and Goldman Sachs are unveiling their numbers this morning. Many other heavy hitters will follow. So here’s the question circling investors’ minds: Will the financial sector get the party started with results worth celebrating?
At the risk of reading too much into Monday’s price action, those who were gobbling up financials certainly think so. XLF was the leading sector on the session, ending higher by 1%. The strength demanded we include XLF as the chart of the day.
If you’re unfamiliar with the history of bank stocks on earnings, allow me to bring you up to speed.
Banks are boring on earnings. Look at the price response to the last handful of reports on any major bank. YAWN. They rarely gap, and if they do, it’s typically a small percentage move. The lack of uncertainty or nervousness shows up in the implied volatility of JPM, GS, and others. Do you see any kind of ramp in the IV reading?
That tells me there’s no concern, which isn’t a bad thing! I think it reinforces my bias that the most likely outcome is minimal movement. And if we do see any fireworks, I’m hoping it’s to the upside, particularly after yesterday’s push.
Chart of the Day
Financial Sector (XLF)
Video of the Day
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Originally published at https://tackletrading.com on July 13, 2021.