Financial stocks have been leading the market lately, rising nearly 1 percent in June to handily beat every other sector. And technical and fundamental traders see reasons for the run to continue.
Fundamentally, David Seaburg of Cowen says that financial stocks have been outperforming due to the expectation that the Federal Reserve is preparing to raise-short term rates, particularly after the strong May jobs report.
"The data are improving," Seaburg said Friday. "I think we've priced a lot of that in, and I think that we've had this Fed-induced rally. Financials with outperform, I think, on a relative basis—but there's no rush to jump right in now for fear that you may miss a big leg up. I think they'll gradually perform better over time, as the data continue to come in at a very consistent format."
In the long-term, "they can really move higher," Seaburg added, due to increased demand for homes from young Americans, which will lead to more mortgage originations. "I'm a buyer for the multiyear run."