We had yet another boring day in the stock market yesterday…as volume continues to come-in at/near the lows of the year….and the intraday range for the S&P 500 has been less than one-half of one percent on four of the past five trading days!....We do get some inflation data this morning with the CPI number, so that could help the activity pick up a little bit…and the news out about the pausing of JNJ vaccinations over blood clot concerns could create an increase in volatility. However, it looks like most investors are looking towards earnings season as a catalyst for the market’s next move.
The vast majority of the earnings won’t come until after this week, but given that we get numbers from BAC, BLK, SCHW, C, USB, BK, CFG, SSB, PNC, and MS on Thursday and Friday, we should certainly get enough information to help activity pickup in the financial sector.
After turning very bullish on the bank stocks early in the fall of last year, we became a bit more cautious about the group about a month ago. Very simply, we worried that the bond market had become very oversold…and long-term interest rates and the yield curve and long-term had become quite overbought on a near-term basis. Since that time, the KBE & KRE bank ETFs fell about 9% into the end of March, but they have recovered about half of those losses over the past week or so.
Therefore, the bank ETF’s stand right in the middle of their recent one-month range, so the earnings results/guidance we get later this week is going to be very important as to how the group acts as we move through the rest of the 2nd quarter. Thus, we’re going wait to see how they act after those earnings releases hit ...