Financial stocks have done this only 3 other times

Financials have been on a heckuva run. So much so that more than half of them hit a 52-week high on Thursday. 

Stocks like KeyCorp, Progressive, and Capital One have surged in recent weeks after a brief consolidation. Even with a breather on Friday, more Financials hit 52-week highs than stocks in any other major sector. 

There were 3 other similar thrusts in Financial stocks hitting 52-week highs in recent months. Over the past 50 sessions, an average day has seen nearly 20% of Financial stocks hitting new highs. This is one of the highest averages in more than 20 years.

Financial stocks 52 week high

Our Backtest Engine shows that there were 3 other distinct times in the past 20 years when financials went on a run like this, with nearly 20% of Financials hitting a 52-week high on an average day over 50 sessions.

Even when looking at lesser extremes in this 50-day average of new highs in XLF, the fund struggled to show sustained gains over the next several months.

Stat Box

Last week, large speculators (typically hedge funds) in major index futures like the S&P 500 and Nasdaq 100 bought more than $20 billion worth of contracts. That's the 5th-largest one-week net purchase in the history of the contracts.

What else we're looking at

  • More detailed returns after Financials see a run in 52-week highs
  • An update to the Market Breadth Composite and what it's saying about stocks' health
  • What to watch for when a large number of stocks in the S&P 1500 become oversold

The post titled Financial stocks have done this only 3 other times was originally published as on on 2021-05-03.

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