At this time, the big banks such as J.P. Morgan Chase (JPM), Bank of America (BAC), Citigroup Inc © and Well Fargo Co (WFC) have shown very poor relative strength. These four financial giants continue to struggle on the charts. In fact, WFC stock continues to make new 52-week lows. Now it is understandable that these stocks have been under pressure for many reasons since the coronavirus scare began.
Low interest rates have certainly been a problem for the large banks and that may not change anytime soon. There is also a lot of investor fear that there will be delays in mortgages, credit cards and loans payments due to the banks by customers since the lock down. While all of these worries are valid, the financial stocks are really just trading sideways in a range since April. Historically, traders and investors prefer to see the financial stocks lead the markets higher. This time around they are certainly still lagging the major stock indexes.
While there is always a chance the financial stocks could begin to firm up and look better on the chart, they have not done so yet. These next few weeks will be very important for the big bank stocks as patterns form on the larger time-frames. Currently, JPM which is one of the most important financial stocks in the market is still trading below its 50-day moving average. Often, major institutions will not buy stocks when they trade below this key level. So a daily chart close above the 50-day moving average would certainly help the financial giant and possibly other stocks in the industry group. Should the financial stocks get going it could be a real boost to the markets as the economy begins to open up slowly. At this time, the financial stocks are still weak and struggling on the charts.