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The drop in long-term rates in recent months still doesn't appear to be affecting bank Net interest income all that meaningfully, and this morning's earnings out of BAC-1.14%  GS-0.44%  and C-0.09%  are lifting these three stocks around 2% in pre-market trading. Technically, there was ample evidence that Financial earnings period might be received favorably by markets given the triangle breakout in the Financial sector that happened back on 10/4, a full week BEFORE Financial earnings got underway. This has helped the Financial sector claw back and is now the best performing sector over the last week based on Equal-weighted ETF performance out of the 11 major sectors. Invesco's RSPF0.25%  is up +3.80% over the last week, far better than the +2.28% in RSP and better than the +2.88% in ^SPX0.63%  itself. Financials outperformance has begun to accelerate following last month's ability of RSPF to have exceeded former all-time highs from early 2022, and technically this sector remains an Overweight.

Today's move in the banks is particularly impressive. S&P Banks index is higher by 2.3% and we're seeing Triangle breakouts by the Equal-weighted Financials ETF (RSPF0.25% ) This is very important and positive to the US Stock market in the short run and stocks like DFS1.97%  COF2.02%  SYF0.34%  and MTB-1.80%  are all making really significant gains today, technically speaking. Financials and Discretionary are the two top performing sectors today, but its the banks that are a standout and the economic strength coinciding with rates rising has been helpful to this sector today. Today's move puts Financials in the spotlight for the weeks ahead, and i expect some good relative strength out of this sector. Financials as a sector remains a Technical overweight.

Big bank shares are paring some of earlier losses and despite a very bad week for Financials, there is some reason for technical hope for stabilization after the Financial sector has reached absolute levels of support per its Ichimoku cloud, while relative charts of Financials are right near prior lows (I'll share this latter chart tonight)- Despite Trading numbers and big stock buybacks being positives for the Banks, the net interest margins along with Loans trailed estimates. I feel like weakness in AXP0.71%  JPM-0.53%  and BRK/B makes these appealing and these are some of my favorites within the entire Financial space along with the Credit card stocks V-0.09%  and MA0.27%  - For a complete list of my favorite Financials, see last week's Friday note- 4/5- "Surveying Financials Sector ahead of Bank Earnings next week"-  While the lack of a strong snapback rally over the next month would make me a bit more nervous on the prospects for Financials in back half of 2024, i had raised my technical rating to Overweight last month and feel like this group is apt to show some strength into May. However, Regional banks and Investment brokers right now are more challenging areas within the Financials space. Chart of Invesco's Equal-weighted Financials ETF (RSPF0.25% ) hitting support, below

Financials are in focus technically after forming a tight ascending triangle pattern that likely should be resolved by an upside breakout. Thus, while markets might seem stretched to many investors, one of the key representative parts of '"the market" is Financials, the 3rd largest part of ^SPX0.63%  at around 12.5%. (XLF-0.65% ) A breakout in Financials will let this move extend even longer. My UPTICKS stocks which i technically prefer are AXP0.71%  (just breaking out today back to new all-time highs above 2/8/24 intra-day peaks) and BRK.B, although this latter stock is growing stretched. Additional technically attractive stocks within the Financials space include V, and MA, along with the exchanges (CME and ICE, this latter could possibly hit new all-time highs by tomorrow's close over 139.79 which could help this accelerate) Overall, Financials are a technical overweight, despite some of the regional banks being under pressure and selectivity remains key. Other names of interest technically: KKR, BX, BRO, PGR- Chart of Invesco's Equal-weighted Financials ETF shown (RSPF0.25% )

Financials are lower by nearly 5% (4.9% as of mid-day, 1/18/24 based on Equal-weighted Financials ETF-RSPF0.25% ) from this year's early peak on 1/8/24. Thus, this sector has fallen for 6 of the last 7 days. Healthcare is also lower by -0.61% and has fallen -2.6% since its own peak on 1/10/24- These are the 2nd and 3rd largest sectors within SPX and represent nearly 25% combined of the SPX. Thus, when excluding Technology, this year has gotten off to a rough start and most sectors are down. "Technology the trickster" has been at work again, making US Equity market seem flat (4751.68 at present, 12:45pm EST on 1/18/24, vs its year-end close of 4769.82) However, to most market participants who are diversified, it's felt a lot tougher than an 18 pt loss in SPX so far in January. Food for thought.

Bounce in S&P failed at 4440 (S&P FUTURESES-2.28% _F) and has given back 30 points in the last 3.3 hours with Technology leading all sectors at +0.35% w/ EPAM, DXC, CTSH, ACN, JNPR, NOW, VRSN all up more than 1% in trading today- Financials lower by more than 1% in Equalweighted terms (RSPF0.25% ) with SCHW, RF, ZION, CMA, KEY all lower by more than 3%. Staples which i wrote about last night lower by -0.68%, and only 3 sectors are now positive on the day into Europe's close- Rates not too volatile today- TNX at 4.33%, while Dollar showing fractional gains +0.23%- Metals positive, Copper up nearly 1%, and Natural gas down -1.8%. 2 key areas for S&P FUTURES are 4390, near uptrend and then 4370, Under 4370 should translate into technical weakness down to 4300-4330 to form a possible low to our decline from 7/27 peaks