Sector Trends

Each Monday I produce a podcast here on greenfaucet.com called Sector Exchange. Through emails and feedback there have been requests to update the sectors throughout the week. So, in that vein I am going to post a written piece that will compliment the podcast called Sector Trends. The focus will be to update the sectors I have highlighted on the podcast.

I discussed the financial sector benefitting from the rumors and official passing of the $700 billion bailout package. Well as only government can do they have not been very nimble at the details or getting this process underway. Throw in Bank of America’s (NYSE: BAC) wonderful news on earnings and need for additional capital and the sector moved lower. The chart below shows the break to a new low after attempting to break above resistance at the 383 mark. The index has dropped 26.1% since that attempt two weeks ago. The primary reason is the fallout in the banks and brokers.

The bank sector chart below shows the break below the support I discussed at 286 only to rally back above that level today.  This is still worth watching short term with the oversold conditions. SPDR KBW Regional Bank ETF (NYSE: KRE) and could be another way to play any move in financials. The challenge remains clarity looking forward. The sector has the potential to move higher, but unless Paulson makes some progress shortly on putting the bailout money to work, there may be a revolt on Wall Street and Main Street.

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