Financials {10.12.10}

Financials will start the day off on a positive note after a nice earnings report from J P Morgan.  We looked at a chart of the financials via the ETF KBE back at the end of September.  We noted then how financials  had underperformed the market and that this index was one of the few not approaching an over bought status. 

Banks have started to act better.  KBE is approaching its resistance levels now which should also be an important junction for other financials.  Index is also not over bought.  The playbook also states that markets do much better when financials are along for the ride so if this index is starting to perform better then it could bode well for the overall market the rest of the year and also into 2011.

*Long KBE in client accounts.  Long JP Morgan in a few legacy accounts.