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Chart Advisor: Spotting Rising Patterns in Finance

Chart Advisor: Spotting Rising Patterns in Finance

Posted March 21, 2024

By Manuel Tellechea, CMT

Investopedia is partnering with CMT Association on this newsletter.  The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice. The guest authors, which may sell research to investors, and may trade or hold positions in securities mentioned herein do not represent the views of CMT Association or Investopedia. Please consult a financial advisor for investment recommendations and services.

1/ Finance Breaks Higher

The finance sector is having a very good 2024. It is second only to Industrials, Technology and Energy.

The fund VFH tracks a market cap-weighted index of companies in the US financials sector. During the last quarter the ETF has grown by about 30%.

The equal weight ETF is not breaking higher yet, but it remains really close to the resistance and the relative strength ratio (below) has turned positive and is continuously moving higher. We probably will witness a breakout in the short term.

2/ Wells Fargo & Co.

Wells Fargo also breaks up and follows in the footsteps of Citigroup and J.P. Morgan Chase.

The price finally breaks the 55 resistance level to the upside, after remaining below this level for about two years. Since the end of 2014, the price has oscillated between 30 and 50 with the exception of the COVID period when the price fell to the 20 level.

Citigroup and J.P. Morgan are already breaking their bases. Will this be the next one?

3/ Stocks Party On

The Dow Jones Industrial Average, S&P 500, and the Nasdaq Composite marked record closes Wednesday for the first time since 2021.

After the Federal Reserve kept interest rates steady and projected three cuts this year, the three major indexes headed toward fresh records. At least for today, concerns that firmer-than-expected inflation could cause the central bank to reduce the likely number of rate cuts in 2024 appear to have dissipated. The Fed has confirmed that the economy is strong enough that it will not have to cut rates.

4/ DR Horton Inc.

D.R. Horton Inc. hit a new 52-week high, surpassing its previous peak of $157.60, which the company reached on January 22nd.

Price continues to break bases and move higher from 2019. The relative strength ratio depicts a solid uptrend that could extend a bit further. The Homebuilding sector remains strong, so we could see the bullish rally continue.

Originally posted on March 21st 2024

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