There is no denying the massive stock market rally since October 4, 2011. The Dow Jones Industrial Average (DJIA) has surged higher by nearly 1200.0 points from it’s October 4, 2011 low. This is certainly a massive rally in such a short period of time. The DJIA, and the rest of the major stock market indexes have all be able to recapture the daily chart 50 moving averages. This tells us that the major stock indexes have some short term strength. The only problem with the recent rally is the weak action in the leading financial stocks.
Yesterday, J.P. Morgan chase & Co (NYSE:JPM) reported earnings and the stock sold off for most of the day. While the company beat analysts expectations it can be debated to a large degree as to how they beat analysts expectations. In other words, the underlying numbers were actually very poor and the stock market told us that with yesterday’s sell off in the stock. JPM stock is considered the best in it’s class. How can investors believe that these other bank stocks will be better then JPM when the rest of the large financial stocks begin to report earnings next week?
Most large banks stocks remain weak on the charts. Goldman Sachs Group Inc (NYSE:GS), Morgan Stanley (NYSE:MS), Citigroup Inc (NYSE:C), and Bank of America Corp (NYSE:BAC) are all still trading below their daily chart 50 moving averages. This tells us that these stocks remain in a weak technical position. Until these stocks shape up and trade higher these stocks continue to point to an uncertain market. After all, the European debt crisis is really just another banking crisis. Keep an eye on these banks stocks before you go ahead and anoint the next bull market. While the stock rally over the past nine days has been incredible the financial stocks are painting a different picture.