The financials are moving again as the first small wave of earnings results hit the tape this morning. Companies like BlackRock, Inc. (NYSE:BLK) and JPMorgan Chase & Co. (NYSE:JPM) beat analyst expectations for earnings in the fourth quarter.
The news has these and other financials surging into what is likely the next level of their recent rally.
The rally in financials has run a long course, but there are still a number of companies in the group that are showing signs of entering the next phase of a rally, including Fifth Third Bancorp (NASDAQ:FITB), Goldman Sachs Group Inc (NYSE:GS) and Citigroup Inc (NYSE:C).
Best Stock Charts: Fifth Third Bancorp (FITB)
Regional banks are getting a nice lift from the earnings picture, but the growing likelihood of higher interest rates is adding a little bullish kick to the regional banks. Fifth Third’s stock is breaking into a new rally that will target another 10% step higher as trading volume and interest in the stock is growing.
- Fifth Third stock broke above its top Bollinger Band today, igniting a volatility rally. The last similar signal was in December.
- The stock also broke above its recent highs of $31.50 with an increase in volume as traders are now buying into the bullish rally in regional banks.
- Short interest on Fifth Third stock is relatively high against its peer companies. The short interest is in the process of declining which suggests that a short squeeze is also helping to fuel the stock’s rally.
Best Stock Charts: Goldman Sachs Group Inc (GS)
The banking giant is starting to break into new high territory along with many other financial companies. This morning’s earnings report from JP Morgan highlighted some losses from the firm’s trading department, which some are saying could be a negative on Goldman’s report. That said, the technical speak well for Goldman, forecasting a break higher after the shares have been moving lower recently.
- Goldman Sachs shares have been declining since December as traders have been concerned about the affect of the new tax law on the company’s bottom line. Now, the decline has the stock coiled for a volatile rebound.
- Support for Goldman Sachs stock should be strong at $250 as this round number has acted as support and resistance in the past.
- The current Bollinger Band width suggests that the company will see an increase in trading volatility over the next few weeks. The company’s earnings report on January 17 will likely serve as the trigger.
- Expectations have been lowered for the company’s report meaning that a report that meets analyst expectations will cause a rally in shares with a target of $270-$275 over the short-term.
Best Stock Charts: Citigroup Inc (C)
Citigroup has spent more than a month consolidating around $75. The consolidation puts Citigroup in the category of being a relative strength laggard against the other financial stocks, but that’s about to change. The charts are pointing to a rally that is likely to carry Citigroup stock through the $80 mark.
- The recent consolidation caused the Bollinger Bands for Citigroup stock to retract to their smallest width in more than a year. This suggests that the stock is ready to break into a volatility move.
- Today’s price activity has Citigroup stock breaking above the top Bollinger Band, indicating that the volatility rally is likely to be bullish in nature. This will attract the technical buyers to the stock like moths to a light.
- Citigroup stock has technical support coming from its 50-day moving average, currently at $74.25. This trendline is rising, which is a bullish signal for the stock.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.