According to Jesse Empsak in his Investor’s Business Daily Article, “Financial ETFs Bounce Back As Banks Beat Views”, financial stocks may be turning the corner.
The financial services sector has been one of the worst performing sectors of the year. For example, The ProShares Ultra Financials ETF (UYG) has lost 49.48% for the year. Fortunately, the fund looked better last week as it gained 19.33%.
Anton Schultz, portfolio manager of Burnham Financial Industries Fund, says stopping the practice of naked shorts allowed the slowdown of short selling and the sell off of many financial stocks. Another factor mentioned is that many of the bad loans worked their way out of the financial system.
Despite the positive signs, Paul Justice, ETF strategist at Morningstar, isn’t completely certain that the financial ETFs have hit their floor. Some of the best performers last week were among the worst year to date. It is possible that this sector rally is temporary.