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Invesco S&P 500 Equal Weight Financials ETFInvesco S&P 500 Equal Weight Financials ETFInvesco S&P 500 Equal Weight Financials ETF

Invesco S&P 500 Equal Weight Financials ETF

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RSPF trade ideas

Financial sector looks ready to heat upRYF has been a slow-mover lately, but it's moving up today after a blockbuster earnings report from JP Morgan. RYF today is exiting oversold relative to the S&P 500. When you look at RYF's chart in isolation, it's right below a breakout level: With attractive valuations across the entire sector, I think this fund will indeed break out on the strength of JP Morgan earnings. We should see more earnings beats in the sector this quarter, especially from investment banks, because the same logic that led to JP Morgan's success (hot stock and bond markets) should favor other firms as well.
AMEX:RSPFLong
by ChristopherCarrollSmith
Banks look fairly valued, but pose a lot of recession riskAlong with energy, the financial sector is one of the few sectors currently at an attractive valuation. With a P/E of 13.3 and a price-to-book ratio of 1.4, banks are quite reasonably priced. The dividend yield of 1.8% is low compared to bonds or energy, however. What worries me about banks is that I think they have a lot of bad debt on the books that will never get repaid, meaning that their assets are inflated and the price-to-book ratio isn't as good as it looks. This is especially true of the holders of student loans, but we've also seen risky mortgages skyrocket in the last few years. With private debt now far above its 2007 pre-recession levels, any significant downturn in the labor market could trigger a wave of defaults and a crash in both the banking and real estate sectors. So however attractive this sector looks on paper, it poses a lot of recession risk. I'd say add this to your portfolio if it pulls back to the "buy" zone on the reverse RSI, but keep it underweight. Exit if we see a series of bad job reports.
AMEX:RSPFLong
by ChristopherCarrollSmith