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Financial stocks line up for outperformance

December 17, 2012

17 December

I have shown several examples of financial stocks setting up for outperformance. Financials is the best performing sector today and one of these trade ideas is lining up for entry.

On 26 November, I showed Wells Fargo (WFC) v Boston Properties (BXP) as a potential Bollinger Band breakout trade. With WFC up 3.38% as I write, the ratio has broken the upper Bollinger Band and is at the green line on the chart.

Wells Fargo (WFC) v Boston Properties (BXP)

Wfcbxp_weekly_rtt_171212

This move would have to be sustained until the end of the week to give a signal according to my breakout criteria.

The banks v railroads trade idea is not as close to being triggered.

In addition, the financial sector is poised to outperform the energy sector and this will be signalled by an end of week Bollinger band breakout, meeting my criteria.

SPDR Financials (XLF) v SPDR Energy (XLE)

Xlfxle_weekly_rtt_171212

This pair meets the criteria of having the tightest bands for three years.

Update on Japanese stock pair

The pair of Kubota (KUB) v Nippon Telegraph  & Telephone (NTT) continues to makes progress and as I write, shows a 10.0% gain. This trade was backed up by an expectation of Yen weakness, but still had to meet the entry criteria for Bollinger Band trades.

Kubota (KUB) v Nippon Telegraph  & Telephone (NTT)

Kubntt171212

From the 19 November posting, the Orix (IX) v NTT ratio has broken above the green, multi year resistance level due to the relative weakness of NTT.

 

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