Bank Stress Test overall results dropped after hours yesterday, and as usual showed that big banks passed the annual event without mishap. This gave the XLF a nice boost with the Fed reiterating the stance that the banking sector is strong and resilient.
If you missed the stress test pop play, don’t worry as historically most of the green comes once the banks start announcing juicy share buybacks as a perk of doing well on the test. Share buyback announcements can begin on Friday June 30th, so have positions ready before open.
Also keep in mind that usually a couple unlucky banks get negative comments or are limited or forbidden to hold buybacks, and these usually drop/miss out on the fun. This is why it’s important to have some diversity on this play as not every large bank will have the same outcome. Sector wise the buybacks should be pretty good based on Fed comments for the pass this time around. Hope this post was helpful and good luck trading!