The candlestick pattern behind 3.2 winning trades per day
The market initially cheered Wednesday morning’s CPI report — the lowest inflation reading in four years sounded promising. Stocks jumped premarket, and tech names led the way.
But here’s the catch…
Without strength in financial stocks, any rally is built on shaky ground.
Financials typically lead when the market’s making a legitimate move higher. Banks are economic bellwethers — they signal when big money is confident enough to step in.
But if banks don’t rally, investors should question everything.
Banks Still Flashing Warning Signs
After the open Wednesday, bank stocks remained cautious. JPMorgan Chase (JPM) finished the session flat, closing down slightly at $158.26. Bank of America (BAC) barely moved, ending essentially flat at $33.06. Wells Fargo (WFC) saw a modest uptick, rising to close at $49.67, but it wasn’t enough to inspire broader confidence.
Even regional banks like Capital One (COF), usually among the first to rally in a real recovery, showed weakness. Shares slipped 0.5%, closing at $133.30. This lackluster performance from the banks reinforces my skepticism.
If the banks aren’t buying it, why should we?
What Needs to Happen Next
For the market to sustain a meaningful rally, financial stocks must clear key resistance. Wednesday’s close didn’t offer encouragement. The Financials sector (XLF) finished the day basically unchanged, gaining just 0.16%. That’s hardly a ringing endorsement from investors.
This tells me caution is warranted.
The morning excitement about inflation easing didn’t translate into a meaningful breakout. If banks remain stuck in neutral, this rally might be nothing more than a head fake, and chasing it could be costly.
Keep your eyes locked on JPMorgan, Bank of America and Wells Fargo and the XLF ETF. They’re the early-warning indicators right now. Until they break higher convincingly, any rally will likely stall.
Bottom line: Without financials leading, this market can’t move higher — at least not for long.
Jeffry Turnmire
Jeffry Turnmire Trading
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