Historically its been positive to see Financials doing well at the same time the broad market is pushing higher! If financial stocks are lagging bit time, should stock bulls be concerned?
This chart compares banks and in the U.S. (XLF) & Europe (EUFN) to the S&P 500 over the past 18-months.
Currently, XLF is lagging the S&P by more than 11% and EUFN is lagging the S&P by over 33%, since January of 2018.
In 2007 & 2014 the S&P 500 was hitting all-time highs and banks were lagging for well over a year. Both of these times the S&P ended up declining in value.
History would suggest that these spreads will narrow in the near future. Stock bulls hope that banks play a game of “upside catch-up!” If the do, they will send a very positive message to the broad markets.
Stock bulls hope this doesn’t happen; The S&P plays a game of “downside catch-up” with the banks!
Keep a close eye these large spreads going forward, as they will most likely send an important message to the broad markets!