Mortgage Finance At Major Support

Tom Bowley

Tom Bowley

Chief Market Strategist,

Financial stocks have lagged throughout 2014 and are showing signs of slowing momentum.  That's keeping hope alive for the bears.  The XLF (ETF tracking financial stocks) has a clear long-term negative divergence in play on its MACD as you can see from the chart below:

Most of the strength, however, has been concentrated in REITs, the defensive area of financials.  That's not exactly where I'd like to see the strength centered, but it is what it is.  One area of financials - mortgage finance ($DJUSMF) - has been lagging very badly as that industry group has dropped more than 6% over the past month, while many REITs have enjoyed gains in the 3%-5% range.  The good news for mortgage finance stocks is that they reached key 2014 price support near 5.85 before bouncing on Friday.  You can see this support on the following chart:

Financials are going to need to see strong earnings reports and guidance over the coming days to counter the slowing momentum issues discussed above.  

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Happy trading!

Tom Bowley
Chief Market Strategist/Chief Equity Strategist
Invested Central/

Tom Bowley
About the author: is the Chief Market Strategist of, a company providing a research and educational platform for both investment professionals and individual investors. Tom writes a comprehensive Daily Market Report (DMR), providing guidance to members every day that the stock market is open. Tom has contributed technical expertise here at since 2006 and has a fundamental background in public accounting as well, blending a unique skill set to approach the U.S. stock market. Learn More