It is safe to say that one of the strongest stock sectors since June 2012 has been the large financial stocks. Obviously, the announcement of the Federal Reserve’s third quantitative easing program in September 2012 is certainly the catalyst for the large move higher in the large financial stocks. The Federal Reserve (U.S. central bank) is now buying $45 billion in mortgage backed securities a month and roughly another $45 billion in U.S. Treasury notes a month. The liquidity flowing through these large bank stocks has certainly helped to inflate these equities.
Today, the large financial institutions seem to be finally pulling back after making new six month highs yesterday. This pullback today in the large bank stocks does not seem to be anything more than profit taking from a very overbought technical condition.
Some leading financial stocks that are retreating today include J.P. Morgan Chase & Co. (NYSE:JPM), Goldman Sachs Group Inc (NYSE:GS), Morgan Stanley (NYSE:MS), and UBS AG (USA) (NYSE:UBS) to name a few stocks in the industry group. Traders should watch JPM stock the closest since it is the leader of the group. Short term traders can watch for intra-day support on JPM around the $44.00 area.