Comments on: Does A Bull Market Need Financial Stocks’ Leadership?

by: Banking Index: Broken & Far Away From Support

Mon, 09 Jun 2008 00:11:07 +0000

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by: Invest for Financial Freedom

Sun, 08 Jun 2008 15:19:00 +0000

Carnival of Equity Trading #9- June 8, 2008…

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by: Babak

Thu, 05 Jun 2008 20:19:31 +0000

yes, exactly - the point I was trying to make is that putting the financials under a microscope is a red herring

by: Barry Ritholtz

Thu, 05 Jun 2008 03:24:09 +0000

Very interesting

But I am less sure the ratio (which i also use) is conclusive —

What you are demonstrating is that other sectors can lead also:

98-99-00 saw technology lead, so banks lagged
same with 04-08 — energy and materials beat financials

The key question is, what is the next sector to lead?

by: C

Thu, 05 Jun 2008 01:02:59 +0000

well, it would certainly help the overall market if one of the largest components were in bull mode…I mean, come on — it is 20% after all. This isn’t telecom we are talking about…

by: b.

Wed, 04 Jun 2008 17:10:30 +0000

I think there is a difference between leadership (which is not needed) and a clearly ailing financial sector. While I agree that financials do not need to lead the way, they have to rise or at least side trade for the market to be able to start a sustainable bull rise. If you look through all the years you provided, a bull leg never started with the banks clearly falling on an absolute basis.

Also, I think looking only at the banks index is misleading. While the 1995-2000 was not led by the banks, it saw *massive* gains for the brokers section of the financial system. Therefore, I think a more comprehensive view of the financial sector health/strength is needed to come to any firm conclusions.

Best –

by: Wednesday links: financial sector woes « Abnormal Returns

Wed, 04 Jun 2008 12:28:28 +0000

[…] Does a bull market require financial stock leadership? (Trader’s Narrative) […]

by: Bruce

Wed, 04 Jun 2008 12:24:30 +0000

On Australian share markets where resource stocks are the “big fish”, financials come second in the pecking order. Currently, miners and oils exceed the capitalization of the banks… They usually lead the market here…. Probably likely to for many years to come given the growing economies…

Bruce
Melbourne

by: JH

Wed, 04 Jun 2008 12:16:58 +0000

Good observation.

Perhaps we don’t need banks. However, the miserable performance may be telling us that banks aren’t going to be able to lend us out of our current malaise for a while.