Earlier this week I asked on X what the most important sector was if your goal was to look at the entire US economy.

My answer was industrials. It covers a huge amount of industry groups, many of which are directly involved with the manufacturing of American goods and services, and has the highest correlation to the S&P 500.

But one of our members pushed back during our Market Blueprint webinar.

"Financials! You can't have a bull market without the banks."

And you know what? He's also right. Banks are incredibly important to not only the economy but the markets in general.

Everything we do in markets is focused around liquidity, credit, and the rising and falling of stock prices.. and that falls squarely within the financial sectors domain.

The thing is.. over the last couple of months, financials haven't really done a whole lot.

As a matter of fact, XLF itself hasn't done anything remarkable in over a year:

XLF has gained a paltry 6% over the last 12 months, tied for second worst among all major sectors, and underperforming SPY by nearly 16%.

That's not good. But there's light at the end of the tunnel.

Since the market bottomed in late March, XLF is up over 12% and third overall amongst major sectors.

It's also pushing into the upper portion of a multi-year range, reclaiming major moving averages, and picking up momentum into new yearly highs:

So the technical setup is improving. But that's not enough to get me to commit capital. There has be something more.

And guess what? Today there was.

Our Hit List Report this morning showcased four major financial names showing an increase in institutional capital flow.

This report looks for short-term Burst Trade setups based around big weekly jumps in institutional capital flowing into individual stocks.

JPM, C, BAC and GS sit at the top of our Tier 1 Burst Triggers. Exactly what I needed to see to start committing capital. And so I did. I bought one this morning.

With earnings set to kick off in 20 days, these financial names have some runway to double before their earnings reports.. giving me an opportunity to own a free lottery ticket through a catalyst should I want to hold them through earnings.

I don't need to. But it's an option.. and it all starts with selling a double. So let's get there first.

What do you think about financials here? Worth the risk? It's been a long time since I've seen them as a sector on any reports as buys. I'm excited. But I'm not going overboard here.

Let me know what you think. Which banks stand out to you? Investment managers? Regionals? I'm on the hunt.

Profits Over Prophets,

Hamilton

PS. Every Wednesday we drop the Hit List Report and Squeeze Radar Report filled with short-term trading opportunities. These have been massively successful over the last couple of months as the market conditions have kicked up the right amount of volatility. If you're interested in learning more about them, click here to read about our Hit List subscription.