Here's something you don't see every day. European Financials hitting new 52-week highs? But I was promised a banking crisis, exclaims JC Parets of AllStarCharts.com.
The relative strength in European Banks in Mid-October was one of the reasons we were buying stocks so aggressively back then.
European Banks are one of those groups that we pay extra close attention to as a gauge of risk appetite. You can probably put other groups like Homebuilders and Semiconductors in that same conversation. If these stocks are ripping higher, chances are the world isn't falling apart. I also think looking inside the index itself is important as well. Take a look at this uptrend in $72B Zurich Insurance Group AG Ltd ADR (ZURVY):
That's a nice chart. But here's the one I own: HSBC Holdings plc. (HSBC). And it's because I like to see relative strength. Remember when we put it on? While the journalists were still crying about a banking crisis, HSBC was already inching up towards new highs.
Sector rotation is the lifeblood of a bull market. Coming into the year, the growth sectors still weren't participating as much to the upside, even though almost everything else was. Then this year we saw the rotation into growth stocks, but small-caps, Industrials and Financials were underperforming. Now they're the strongest areas. Even European Banks are joining the party.
In bull markets, the majority of stocks go up in price. Currently all 11 sectors are above their 200 day moving average. The Dow Jones Industrial Average is just 3.9% away from a new All-time Closing High. That's less than 1400 points. Leadership continues to rotate among different sectors. The list of new highs keeps getting longer. What are you doing about it?
To learn more about JC Parets, please visit AllStarCharts.com.
