Financial Sector Wed 2025-03-26: 4.7 Strength Score (Strengthened +0.3)

Brian Degracia

26 Mar 2025 • 7 min read

FINANCIAL SECTOR STRENGTHENED for the week ending 03/26/25. Two of four industries strengthened one rating (Financial Services and Insurance). Insurance is the leader at 3Stronger. Banking, Financial Services, and Real Estate lag at 5Average. An industry can NOT change strength rating yet still "strengthen" or "weaken" for the week because underneath the surface there can directional movement not material enough to change the strength rating. Taken in the aggregate over the sub-industries that make up industries and then sectors, this can provide helpful insight into the underlying currents at each level.

Overview

This post consists of the following sections:

I. Key Background Information
II. Financial Sector Detailed Analysis

SECTION I: KEY BACKGROUND INFORMATION

Sector Weekly Summary

The Financial Sector strengthened +0.3 points to a 4.7 composite score this week as two of four industries strengthened rating (Financial Services and Insurance) while the other two strengthened but not enough to change rating (Banking and Real Estate).

Insurance leads at 3Stronger while the other three industries are at 5Average.

Difference This vs. ETFs Analysis

Note this analysis is the same as that used for the SPDR ETFs published every Tuesday and Friday (here is yesterday's report dated March 25, 2025) but the two main differences are:

1. Universe of stocks. The ETFs are the largest capitalization stocks, 500 of them in the 11 sector ETFs. In this analysis, there are approximately 2,700 stocks.
2. Sub-categorization below the market level. The ETF analysis with 500 stocks is limited to sector strengthening and weakening. This analysis with +/-2,700 stocks can be and is segregated into 29 industry groups and in turn 189 sub-industry groups.

There is a Financials ETF (symbol XLF) which is separate from the Real Estate ETF (symbol XLRE). The Financials sector in this analysis includes Real Estate with Banking, Financial Services, and Insurance.

Per yesterday's ETF strength analysis, XLF/Financials is at 4Strong (strengthening but not enough to change rating) and XLRE/Real Estate at 5Average (unchanged). In today's larger universe analysis, all the industries strengthened though only Financial Services and Insurance did so enough to change rating (to 5Average and 3Stronger, respectively). Insurance leads at 3Stronger while the other three industries are tied at 5Average. In general the larger-cap stocks match the strength of the smaller-/mid-cap stocks.

How would I interpret and use this information?

March 25, 2025 strength ratings for the 11 SPDR ETFs show XLF/Financial ETF at 4Strong, strengthening but not enough to change rating, and XLRE/Real Estate at 5Average, unchanged.

Recognizing that anything can happen at any time and I will never know the reason why until after the fact if ever, I am looking to give myself the best chances of an individual stock going my desired direction by stacking strength going long or stacking weakness going short, depending on strength/strengthening and weakness/weakening at the stock, sub-industry, industry, sector, and market levels. One quick way to discern this is to look at the differing market levels in terms of headwinds and tailwinds as noted below.

Current Market and Sector Environment: TAILWIND

MARKET = TAILWIND
The Market Strength Score changed to positive ("Risk ON") at +6% as of Friday, March 14, 2025.
SECTOR = Tailwind
The Financial sector strengthened this week +0.3 to a 4.7 overall rating. If at all interested in positions in this sector, it is better to go where there is strength/strengthening - as reflected by price. This Stock Market Organizer methodology explicitly reveals this.

Current Industry/Sub-Industry Environment: Tailwind

Banking = tailwind
5Average, strengthened but not enough to change rating
Financial Services = tailwind
5Average, STRENGTHENED enough to change rating
Insurance = tailwind
3Stronger, STRENGTHENED enough to change rating
Real Estate = tailwind
5Average, strengthened but not enough to change rating

Final Comments

There is absolutely no way of determining how long this environment will last. All one can do is find an objective way of measuring whether any given environment offers headwinds or tailwinds and then act accordingly based on these measurements.

This methodology measures what IS, acts accordingly based on objectively set rules, and never attempts to make predictions. As the market environment facts change based on systematic and repeatable measurement, then so do the appropriate actions.

Details are below shown in a manner not available elsewhere because I created it from scratch to continually answer this question: “Where is there strengthening and weakening in the market at the stock, sub-industry, industry, and sector levels?” Combine this with the top-down Market Strength Score and Sector Risk Gauge to get a key competitive advantage of understanding strength at every level. Why? Because the market does not have to be so complicated.

SECTION II: FINANCIAL SECTOR DETAILED ANALYSIS

Section Table of Contents

Introduction - Industry Components
INDUSTRY 1-Week Strengthening, Positive/Negative % Stocks
INDUSTRY 10-Week Strengthening
SUB-INDUSTRY 10-Week Strengthening
STOCKS Outliers: Strongest/Weakest Rated
STOCKS Outliers: 1-Week % Change
STOCKS Outliers: 5-Year Highs/Lows

1. Introduction - Industry Components

Banking

Largest of 9 sub-industries (267 stocks, average 30)
- Regional - Northeast Banks (89 stocks)
- Regional - Mid-Atlantic Banks (32 stocks)
- Regional - Pacific Banks (31 stocks)
- Savings & Loans (30 stocks)
- Regional - Midwest Banks (27 stocks)

Top 10 Market Caps: JPM/JPMorgan Chase and Co, BAC/Bank Of America Corp, WFC/Wells Fargo & Company, RY/Royal Bank Of Canada, HSBC/HSBC Holdings Plc, C/Citigroup, TD/Toronto Dominion Bank (The), MUFG/Mitsubishi UFJ Financial Group Inc. ADS, SAN/Banco Santander SA, USB/US Bancorp

Financial Services

Largest of 5 sub-industries (125 stocks, average 25):
- Asset Management (46 stocks)
- Diversified Investments (38 stocks)
- Credit Services (22 stocks)

Top 10 Market Caps: MS/Morgan Stanley, AXP/American Express Co, GS/Goldman Sachs Group Inc, BLK/Blackrock Incorporated, SCHW/Charles Schwab Corp, KKR/KKR & Co. L.P., BX/Blackstone Inc, ICE/Intercontinental Exchange Inc, APO/Apollo Asset Management, PYPL/PayPal Holdings Inc

Insurance

Largest of 5 sub-industries (85 stocks, average 17):
- Property & Casualty Insurance (52 stocks)
- Insurance Brokers (12 stocks)
- Life Insurance (12 stocks)

Top 10 Market Caps: BRKA/Berkshire Hathaway Cl A, PGR/Progressive Corp, CB/Chubb Corp, MMC/Marsh & McLennan Cos Inc, AON/Aon PLC, AFL/Aflac Inc, AJG/Arthur J Gallagher & Co, MET/MetLife Inc, TRV/The Travelers Companies Inc, MFC/Manulife Financial Corp.

Real Estate

Largest of 8 sub-industries (172 stocks, average 22):
- REIT - Diversified/Industrial (49 stocks)
- Property Management/Development (33 stocks)
- REIT - Residential (24 stocks)
- REIT - Retail (16 stocks)

Top 10 Market Caps: PLD/ProLogis Inc, AMT/American Tower Corp, WELL/Welltower Inc, BN/Brookfield Corporation, PSA/Public Storage, DLR/Digital Realty Trust Inc, SPG/Simon Property Group, O/Realty Income Corp, CBRE/CBRE Group, Inc., EXR/Extra Space Storage Inc

2. INDUSTRY 1-Week Strengthening

Overview

What: A closer 1-week look at industry and sub-industry strengthening
Why: a multi-month rally begins with one up week. Meaningful moves last and can last longer than expected.

Positive/Negative % Stocks

3. INDUSTRY 10-Week Strengthening

Overview

What: A comparative 10-week look at industry strengthening
Why: clearly and quickly understand where there is strengthening and weakening over a relevant time frame

SUB-INDUSTRY 10-Week Strengthening

Overview

What: recent week-by-week strength changes for the industry and its sub-industries
Why: objective measurement of strengthening and weakening enabling comparison within and across industries and sub-industries

This key provides a guide for how to read the charts in this section.