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The market pulled back on Monday despite some opening strength that allowed the S&P 500 to tap another all-time intraday high. The pullback in the Dow wasn’t too concerning, however, as a higher high than Friday was made.

In addition to the transports and oil, it will be important for the financial stocks to show continued strength. The Financial Select Sectors SPDR (XLF) finally broke out of a four-week trading range to clear $24 last Friday. The two-year chart below shows that a run to $25 or higher could be in the cards over the near term. This is a very bullish development as long as fresh support at $23.75-$23.50 holds on a pullback.

It is hard to trust the financial stocks following Japan’s $274 billion stimulus package last week. To put things in perspective, it was the country’s 26th stimulus package since 1990. Wow. Rumor has it that the country is using the cash from the stimulus package to buy everything under the sun, including U.S. stocks.

The race to the bottom continues, as Australia cut its interest rates to record lows recently, and the euro hit five-week highs against the U.S. dollar. While Bank of America (BAC) warned of post-Brexit woes, in any event, the charts are looking bullish for the bank stocks. BAC surged 4% last Friday to clear $15, which easily put 52-week highs back on the map. The two-year weekly chart shows the 52-week high north of $18, with longer-term resistance at $15.50-$16.

To play continued strength in the stock, I have a new call option trade that I expect to double from current levels.

Buy to open the BAC September 15 calls (BAC160916C00015000).

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