Bank stocks, led by the Financial Select Sector SPDR Fund (NYSE: XLF), are showing signs of momentum after bottoming in late June but this begs the question: can the equities sustain their momentum near six-month highs or will they finish lower for 2018?
Michael Bapis, managing director with Vios Advisors at Rockefeller Capital Management, and Stacey Gilbert, head of derivative strategy at Susquehanna, talked bank stocks during a CNBC "Trading Nation" segment.
Bapis: 'Love The Sector'
Investors should "love the sector," as banks continue to operate in a friendly interest rate environment, Bapis told CNBC.
The banking sector has yet to see much benefit from multiple potential catalysts such as tax reform and regulatory easing, which are in their early stages, he said.
The fact the industry is undergoing a "technological revolution" is perhaps flying a bit under the radar, Bapis said. The banking sector and big tech are "more aligned than ever," he said.
This creates a scenario where banks have a pathway to continue making money from traditional banking services but also generate new revenue streams from technological innovation, he said.
Gilbert: Take Profits Off The Table
Even if the environment for banks remains encouraging, the options market is signaling investors are taking advantage of the recent surge in bank stocks to take some profit off the table, Gilbert told CNBC.
After all, banks as a whole offered "cautious at best" commentary in their recent round of earnings reports, and investors should be wary ahead of the next round in October, she said.
"We'd actually use [Wednesday's] opportunity to take some profits right here."
Shares of the Financial Select ETF were trading higher by more than 1 percent at $29.04 at the time of publication Thursday.
A Concerning Weakness In Bank Stocks
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