-20% Inauguration Day

By now, you’ve certainly seen that the KBW Bank Index fell 20% yesterday. That’s a crash in one day. If you like a market that takes care of business in a hurry, this one’s for you.

Amid the calls that such a dump on Inauguration Day means that fledgling President Obama is not up to the task, let’s look at technical measurements that might provide something useful to help you make a decision, and possibly some money.

Using UYG as a proxy for the financial sector, we find that the last time we saw a drop this hard this fast was the November low. In the two trading sessions of Nov. 19 and 20, it dropped 22% to $3.74 and an RSI of 28. In the following five sessions, it gained 68%.

Fast forward to now. In the last two sessions, UYG has dropped 31% to $2.73 and an RSI of 26. Since Jan. 6, it’s down 55%.

That drop and that RSI show oversold and ready to bounce, just as they did on Nov. 20. What’s more, the contrary indicator shows overbought and ready to crash, just as it did on Nov. 20. SKF, the -2x Financials ProShare, topped out on Nov. 20 at $262 and an RSI of 74 after running up 137% in 12 sessions. Yesterday, it closed at $199 and an RSI of 74 after running up 96% in 9 sessions.

Interesting, to say the least.

Regardless of whether you think Obama is the man to fix the economy, you probably see the inherent strength of a president in town for a while instead of a lame duck packing his bags.

This entry was posted in Uncategorized. Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

Post a Comment

Your email is never published nor shared. Required fields are marked *

*
*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

  • Here are your three options:

    Option 1: Annual Subscription

    For just $236.97 per year, you’ll receive everything listed above to completely upgrade the way you manage your investments, including a copy of The 3% Signal. This is what I recommend:



    Option 2:Monthly Subscription

    If you'd like to try The Kelly Letter  without paying the full year, you can pay $19.97 per month, but it will not include a copy of The 3% Signal :


    Option 3:Free Email List

    If you'd like to hear more from me but aren't ready to part with any money yet, you're welcome to join my free email list:

    Join the free list






    Thank you for the work you do. You're a household name here and my wife and I often discuss your letters on Sundays. My ten- and seven-year-old children recognize your name and will eventually be taught to invest using 3Sig and 6Sig. You've had an enormously positive impact on our investing and inspired me to look at the world in more rational and clear terms than I did years ago. I'm sure that thousands of others would say the same. Kelly Letter subscriber Matt Barnes
    Matt Barnes
    Product Line Director
    OCLC

    Join Matt and thousands of other rational investors to invest without stress.

    Subscribe to The Kelly Letter  now!

Bestselling Financial Author