🚨 I’ll be live at noon ET🚨
We’ll analyze markets and fast-moving stocks, then we’ll cover how to get the most of the Sniper Scalper, my workflow and more [tap to join us for the VIP Trade Room]!
There’s something happening in the Financial sector (XLF) that has me more excited than any tech rally — and I want to walk you through exactly why.
Financials are starting to come up, and honestly, I’m more happy about financials beginning to move than anything else. The logic here matters for how you should be positioning yourself right now.
A big part of the story is how narrow the market has become. The top 50 stocks have doubled, and the top 100 — about 20% of the S&P 500 (SPY) — are up dramatically, while the remaining 400 stocks are barely positive.
That kind of disparity is a serious issue. When only a small cluster of names is carrying the entire market, you’re on shaky ground. That’s why fresh participation from financials is so significant. It is one of the first signs of broadening we’ve seen in a while.
And here’s the thing — let us say chip stocks keep climbing higher. Their multiples keep expanding, momentum keeps building. But if the economy slows, people will be buying less, and it will eventually hit everything.
If we’re in a recession, people are not lining up for new iPhones. It’s down to essentials. That’s why financials strengthening means something entirely different.
It suggests the underlying structure of the economy may be improving — not just one sector riding a momentum wave.
The Identical Twins: Goldman Sachs and Morgan Stanley
To get a clear picture of what’s happening, I looked at Morgan Stanley (MS) and then pulled up Goldman Sachs (GS). Both charts looked fantastic, moving almost identically. So I ran a correlation study, and the numbers were unreal: 98% price trend correlation and 76% daily return correlation. That’s not similarity — that’s twins.
When two major financial names move with that kind of precision, you can use one to confirm the other. If GS breaks out and MS does not follow, something is off. But when both move together, you are seeing sector-level strength, not a one-off anomaly.
Trading Tip: When highly correlated financial names move in sync, you can treat their agreement as confirmation that the sector trend is real. If both are pushing higher with momentum, the probability of the rotation sticking increases.
What makes this even more notable is the macro backdrop. Oil prices have jumped sharply, global tensions have escalated, and this quarter will be fully exposed to those pressures. Financials showing strength into that environment is not random — it is resilience.
Why This Sector Rotation Matters Now
Market breadth has not been healthy. Decliners have regularly outpaced advancers on major indexes, and new highs have not spread beyond a narrow slice of names. That’s why seeing financials step up matters. It’s one of the few places where we may get genuine broadening instead of concentrated leadership.
That said, we’re still on uneven ground. There’s a chance blue chips lift the market the way tech has, but the probabilities are not overwhelmingly high with current headwinds. Financials improving is bullish, but caution is still warranted until more sectors confirm.
Real-Time Trading Insight: When volatility is moving directionally with the market, it often signals strong momentum. If vol and the market are rising together, that’s usually bullish and can justify leaning long. It also means avoiding shorts when that tailwind is active.
I am not anti-tech. I am simply pointing out that the narrow tech rally is not enough on its own. Financials stepping up is a healthier, more durable sign — the kind that supports a real, sustainable market move.
I hope that helps!
Roger Scott
Roger Scott Trading
Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
- Telegram:https://t.me/+_vmfwkeP8fA5YWQ5
- YouTube:https://www.youtube.com/@Roger-Scott/videos
- Instagram:https://www.instagram.com/thetradingpub/
- Facebook:https://www.facebook.com/TheTradingPubOfficial
- Twitter: https://twitter.com/Rogerscott1970
Important Note: No one from The TradingPub team or Roger Scott Trading will ever message you directly on Telegram.
P.S. Want Free Access to the All-New Sniper Scalper?
The same secret that helps us spot stocks Wall Street’s buying at that very moment, giving us shots at double and even triple-digit returns in just minutes!
Disclaimer: We develop tools and strategies to the best of our ability, but we can’t guarantee the future. Past Performance is not indicative of future results. Because the Sniper Scalper is a tool for Traders, results will vary among users. Trade at your own risk and never risk more than you can afford to lose.
