Will The Rally In Financial Stocks Continue? Is It Important? Part Two
It looks like the short answer to the question from last week is No, and, I continue to believe, Yes. In a choppy and slightly down market the banks and insurance companies were down 3.5 and 2.3 percent, respectively, due to commercial property loan quality worries.
May 19 (Bloomberg) — U.S. stocks declined as banks fell after Moody’s Investors Service said commercial property values plunged and Home Depot Inc. retreated following an unexpected slump in housing starts.
Marshall & Ilsley Corp. and Zions Bancorporation lost more than 14 percent following the Moody’s report that showed real- estate prices fell 21 percent in March from a year earlier and predicted additional declines. Home Depot, the biggest home- improvement retailer, slumped 5.3 percent even after beating analysts’ profit estimates as the Commerce Department said builders broke ground on the fewest homes on record in April.
Basic Materials and the oil sector up slightly. Oil, usually a mid to late cycle rotational sector, has been surprisingly strong, leading me to believe that the economy is at least doing okay, and maybe better than has been recognized. Further, The S&P Financials Percent Bullish indicator is looking tired and very toppy.
