Financial stocks set up for a bullish pattern not seen in nearly a decade, according to chart

SourceCNBC
SectorFinancial Markets
CountryMiddle east

Financial stocks have been on fire so far this year. The XLF financials ETF has risen more than 17% over that stretch, roughly double the gains by the S&P 500. A shockwave from the Archegos margin call news last week failed to deter the rally in the group. Matt Maley, chief market strategist at Miller Tabak, said the stocks may succumb to some short-term weakness after that rally. "They've become very, very overbought a couple of weeks ago," Maley told CNBC's "Trading Nation" on Tuesday. "You look at its RSI chart, relative strength index, on a weekly basis, it's still quite overbought. The last three times it got this overbought, it took a long time for it to really work off that condition and bounce back." The XLF ETF trades at 72 on its RSI, an overbought condition it has not seen since January 2018.

Any reading above 70 suggests an asset is overbought. Still, Maley said the longer-term setup looks incredibly strong for the...read more...