-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. Both comments and trackbacks are currently closed.
  • The Kelly Letter
    A Complete Investment Management System
    The Kelly Letter  every Sunday morning by email.
    Like no other. Many subscribers say this is the best read of their week, astonishing in its ability to distill seven days of noise into one succinct overview of the very few items that might matter. Start your Sundays right!
    A one-page Quick Start Guide
    with page number references to full information in The 3% Signal. You'll receive access to this right away so you can begin transforming your portfolio into a performance machine immediately.
    The 3Sig Calculator.
    A thing of beauty! You'll use it to generate your own personal signals every quarter including exact share amounts to buy and sell based on your account balances. It emails you the results to make later quarters easy by keeping last quarter's numbers at your fingertips. Some subscribers say this tool alone justifies their subscription price.
    The subscriber-only section of this website
    where likeminded investors are commenting on notes and discussing in forums. Jason joins these interactions every day. They're a treasure trove of investing tips and wisdom.
    The archive of Kelly Letter notes.
    It’s a research center, searchable and smartly tagged to make gathering time-stamped material on covered subjects easy.
    The subscriber podcast.
    Jason reads every letter word-for-word. This feature was requested by subscribers who prefer audio learning. They listen on their Monday morning commute, during a workout, or while reading along at their computer.



    $200/year
    Save 17%



    $20/month
    Pay as you go
    Or sign up to receive free email and learn more about the system.
Bestselling Financial Author