As the earnings season unfolds, there is potential for a breakthrough in the often overshadowed part of the financial sector, particularly for the Global X FinTech ETF (FINX). While major Wall Street players typically dominate the spotlight, technical analyst Rob Ginsberg believes that the FINX ETF is currently looking attractive after a prolonged period of underperformance in comparison to the broader market.
Ginsberg highlighted in a recent note to clients that the FINX ETF has been building a solid base over the past two years, positioning it at a crucial juncture to maintain its existing setup. Despite experiencing a significant decline starting in late 2021, the fund has managed to deliver a total return of over 7% in the last three months, showcasing early signs of a potential rebound in 2024.
While many major banks have already reported their quarterly results for the month, there are still financial companies with upcoming earnings announcements that could serve as catalysts for the FINX ETF. Notably, four of the top five holdings in FINX are yet to disclose their earnings for the current cycle, with Paypal being a particularly intriguing prospect.
According to Ginsberg, the FINX ETF exhibits favorable technical signals, such as an uptrend from the October low and consistent trendline support. These indicators suggest a potential upward trajectory for the ETF, reinforcing the notion of a possible breakout in the financial technology sector.
Despite the optimistic outlook, it is essential to acknowledge the potential downside risks associated with earnings reports, which could act as catalysts for financial technology stocks and the FINX ETF. Additionally, investors should be mindful of the relatively high expense ratio of 0.68% that comes with investing in the fund.
The FINX ETF presents an intriguing opportunity within the financial sector, with a strong technical foundation and promising catalysts on the horizon. While risks exist, the potential for a breakout in the financial technology sector could make the FINX ETF an appealing investment option for those seeking exposure to this market segment.