Recession Narrative vs. Financial Sector (XLF): The Data Tells an Interesting Story

While the narratives around recession risk are gaining traction, the Financial sector (XLF) isn't showing any clear signs of weakness yet. In fact, the percentage of new highs in the XLF continues to consistently outpace new lows, indicating a strong and resilient uptrend.

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The recent pullback? Currently, likely nothing more than profit-taking - we’ve seen a reduction in new highs but no corresponding spike in new lows, which suggests no broad-based selling pressure.

This supportive trend quality defenitely challenges the recession narrative. Typically, a recession would significantly impact the profitability of financial institutions, driven by a sharp rise in defaults. But that’s not what the data is showing at this point.

Could a recession be in the cards for the future? It’s possible, but the current data doesn’t suggest it’s imminent - at least for now. What you think.