The financial stocks and ETF’s have already responded nicely to the policies of the new administration, and the Fed’s move to raise interest rates. Beginning in early November, after spending most of 2016 in a consolidation period, they broke out. In the month of December they paused and then consolidated again. However, they are setting up for another potential move up.

Sometimes the second move after a long consolidation period is larger than the first move. Let’s take a look at the Financial Select Sector SPDR Fund (XLF), a financial ETF. Notice the consolidation period, followed by the breakout in early November, and now another consolidation period. Also, notice the Squeeze and Multi Time Frame indicators are both engaged.

FAS

If you prefer trading individual stocks, below are charts of Goldman Sachs (GS) and Morgan Stanley (MS). You will see a very similar pattern in both charts. They are also setting up for another potential move up. Once again, notice the consolidation period, followed by the breakout in early November and now another consolidation period. Also, notice the Squeeze and Multi Time Frame indicators are both engaged.

GS

MS

There are other financial stocks with simpler patterns. Look at charts for US Bancorp (USB), JP Morgan (JPM) and Bank of America (BAC), just to name a few.

I hope this helps,

Simpler is Better.

Tucker

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