Financials
Sector Rankings; Attractive & Unattractively-Rated Industry Groups
The top-three-rated sectors are Communication Services, Information Technology, and Financials. As recently as March, Financials ranked in 9th place out of 11 sectors; it has now placed among the top four since May. Real Estate dropped out of the top three after a two-month visit and is situated in 5th place this round. For the fifth consecutive month, the three lowest-ranked sectors are Utilities, Materials, and Energy.
Sector Rankings
The top-three-rated sectors are Communication Services, Financials, and Real Estate.
Financials Strengthen Among GS Scores; Specialized Finance Purchased
The Financials’ Group Selection (GS) Score sector-composite rating has incrementally improved over the past five months, rising to rank #2 out of 11 sectors in late June.
Sector Rankings
The top-three-rated sectors are Information Technology, Real Estate, and Financials.
Signs Of Spring For Financials
Signs of spring are popping up everywhere in the Financials sector. S&P Financials was easily the top- performing sector in April and several sub-industries have been bubbling higher in our Group Selection discipline.
The Investment Merits Of Asset Management Companies
Industry trends and the investment merits of companies involved in the asset management business; we contrast ETF providers with firms involved in traditional active management.
Financials Remain Atop Sector Rankings
Our Financials Sector Ranking has been strengthening since August—well before the Trump Bump. The addition of Regional Banks to our SI Portfolio boosts our Financials exposure to an overweight 26% versus the S&P 500’s 15% weight. Reinsurance and Developed Diversified Banks are also among the Attractively-rated options for diversification within the sector.
Financials With Post-Election Appeal
Forces specifically driving many Financials groups include expectations for an ongoing yield rally and a steepening yield curve, tax cuts, and loosening financial regulation. While these outcomes remain largely speculation, the odds have improved and any of these developments would be a welcome change.
Financials: "Thrice Blessed"
The S&P 500 Financials’ four-day, 11% rally has carried the sector to a new bull market high and the best closing level since May 6, 2008. The new high eliminates one of the long-term negative divergences from the Red Flag Indicator discussed periodically in the Green Book. Another longtime “Red Flag,” the Dow Jones 65 Composite, closed yesterday only fractionally below its December 29, 2014, all-time high. This is good action.
Financials: All’s Well If You Don’t Look Far
So long as one maintains a “nationalistic” perspective, Financial sector indicators support a bullish view toward both the economy and stock market.
Stock Market Observations
Commentators now label this cyclical advance the “seven-year bull market,” but that won’t be semantically true until the S&P 500 closes above its May 2015 peak of 2130.82.
Strength + Weakness = Weakness?
We like to think our models and indicators help us preserve a high degree of market objectivity. But sometimes we wonder: the latest rally has progressed to the point where we see trouble afoot in both the strongest and weakest charts we can find.
Info Tech, Financials, Health Care—Remain Top Three Rated Sectors
Among the bottom ranked sectors are Utilities, Materials, Energy, and Telecom Services. These four sectors have been the bottom four rated sectors for a minimum of eight months.
Cheapest Sector Strategy
We recognize that—regardless of their empirical appeal—momentum-oriented approaches aren’t suitable for every investor. For those investors, we’ve identified an alternative sector allocation strategy that’s delivered long-term results almost identical to those of the Bridesmaid approach, but which is based on a single, simple selection criterion that should appeal to the most hard-wired contrarian: The Low P/E.
GS Score Sector Rankings, and Highlighted Attractive Groups
Health Care, Consumer Discretionary, and Financials are the top three rated broad sectors.
Charts That Challenge Us…
While our disciplines continue to turn up enough bullish evidence to keep us cautiously positive toward stocks, we are seeing troubling signs by cyclicals (especially the Transports) and junk bonds.
New Laggards On The Radar Screen
Transports now find themselves in a three-month RS downtrend; it’s too early to tell if this is an important message. Leading up to 14 of the last 16 bull market tops, Transports underperformed for a six to 12-month period prior to the final bull market high.
NASDAQ Now, Financials Next?
We wouldn't be surprised if the S&P 500 Financials require a recovery period just as long as NASDAQ's.
Electronic Payment Industry: The Mobile Pay Players
On October 20th, Apple Pay was officially launched in the U.S. with great fanfare. Since the launch, we’ve heard a lot of buzz words such as “disruptive,” and “transformation,” and then “million users signed up within the first three days.” Amid this enthusiasm came the bad news that some retailers, including Rite Aid and CVS, disabled Apple Pay at their POS’ and reports broke that a retailer consortium was developing a rival payment system.
Profit Margins At The Sector Level
All ten of the S&P 500 sectors recorded a sequential increase in four-quarter trailing net profit margins. But consider where sector margins stand today relative to their 25-year medians. Eight of ten S&P 500 sectors are recording profit margins well above their long-term medians.
Perception for the Professional
March 2026 Issue
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March 2026 Issue
