Last week we highlighted the surprising recent strength in the financial sector and the recent SSI Entry signal in XLF, the Financial Select Sector SPDR ETF.
Today we’re going to drill down into the biggest component stocks in XLF and see if we can get a deeper picture about what’s going on.
Here’s an updated SSI chart of XLF.
XLF held on to its recent gains this week. Since triggering a new SSI Entry signal a couple of months ago, XLF is up another 4%. The S&P 500 is up about 1% over the same period of time.
Let’s drill down now and take a look at what’s going on with the top 10 individual component stocks of XLF. Here’s a table showing these stocks, their current Volatility Quotient (VQ%) and where each stands relative to our Stock State Indicator system (SSI).
Half of the top 10 XLF stocks have active SSI Entry signals and most of the others are close to triggering new SSI Entry signals. Let’s look more closely at the top XLF stocks Berkshire Hathaway and JP Morgan Chase.
Berkshire Hathaway (BRK.B) is leading the pack. It triggered a new SSI Entry signal back in May of this year and has moved about 5% higher since then.
Berkshire also recently broke through strong overhead resistance as shown on the volume-at-price chart below.
It looks like new highs are on the horizon for Berkshire Hathaway.
JP Morgan Chase (JPM), on the other hand, has yet to trigger an SSI Entry signal but looks like it will do so soon. Similar to Berkshire, JPM has recently broken out above its overhead volume resistance but has yet to make new highs.
Unlike Berkshire, however, JPM has not yet triggered a new SSI Entry signal. The SSI system is waiting for the SSI Trend to strengthen some more to fully confirm that JPM is likely to continue higher from here.
You can see in the chart below that the SSI Trend has started to turn up and appears to be strengthening. If JPM stays steady or moves higher from here, it will likely trigger a new SSI Entry signal in the next one to two weeks.
Part of my investment philosophy is that as individual investors our sweet spot is in individual stocks as opposed to indices and ETFs. It takes a little more work to dig into the details of the individual stocks but I believe it’s worth it.
It’s also more fun to be invested in individual companies as opposed to the less personal ETFs.
One great way to identify individual stocks of interest is to first look at what’s going on at the sector level and then drill down to the individual stocks in the sector to find one or two that are of interest to you.
The tools of TradeStops are at your fingertips to help you do so.
Have a great weekend,
