Today we take you back to our financial sector analysis - A sector we have been talking about for many many months. Especially in our VIP NEWSLETTER HERE.
As you can see on the chart, every time the XLF or the Financial sector gets close to the 200 moving average line [red line] You can see it rallies nicely. The last time we got close to this line was at the Height of the GREECE financial crisis, which still seems to be going on. The country is on the verge of collapse, yet this chart is doing well. In our humble opinion it has nothing to do with GREECE, and more to do with US companies, and the FED who have pulled down interest rates to practically ZERO!.
Obviously the FED cannot go to MINUS interest rates, as in JAPAN, they did this, and it took them years to recover. So our thinking is that they will HAVE to raise to raise soon. They have not other option. Basically when you see rates rise, the other thing that will happen is banks make more money they give out more loans, they get more deals, they take in more profits, and the companies perform stellar. Its a slowly slowly but surely type mechanics that might be about to take place.
Now, do not hold us to that, as the FED could hold rates where they are for the next 5 years. But those would be the lesser odds. If they actually do start to raise rates, maybe soon, then this is an ETF you might want to watch. Instead of buying up the banks stock individually, buying up an ETF, like the XLF or financial sector might be an option going forward. Its as chart to keep on your radar, that is for sure.
You can see the performance of the financial XLF sector the last few days has been ridiculously good. but that party might be just starting, and the first few people may just be arriving. Time will tell.
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