Each week, I review the rate-of-change spread by comparing sectors and sub-industry groups to the S&P 500 across multiple timeframes. One development that stood out this week was the 252-day range rank for Financials falling to the 1st percentile — one of the weakest readings in roughly 75 years of data.
Financials do not necessarily need to lead for a bull market to continue, but sustained underperformance from the sector is rarely an ideal backdrop. The encouraging sign is that banks are not showing up among the 20 weakest sub-industry groups, which suggests this is not currently signaling the type of credit deterioration that has historically created broader market problems.
Each Chart of the Week highlights a theme, idea, or historic event that stood out to us. If you find it interesting, feel free to share it with friends or colleagues.
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