Although they've managed to stay under the radar over the last few days, the financial stocks have actually emerged as one of the better sector opportunities, if the market can at least stave off a catastrophic pullback. With the exception of energy (which is historically unsynchronized with other sectors) and telecom (which saw a dangerously bullish runup over the last few days), the financial sector wound up putting the biggest gains on the board last week. And more than that, the Dow Jones U.S. Financial Services Index (DJUSFV) completed a handful of technical buy signals.

Just for the record, the Dow Jones Financial Index gained 2.88% last week, and gained 1.96% the week before that. That puts these stocks near the top of the list of all sectors over that two-week period. So, even from just a sheer relative strength point of view, the index/sector deserves a closer look (in a bullish light).

However, our renewed attraction to them is rooted in two key pieces of the chart. First, is the cross back above the 200 day moving average line (green). The index had been struggling there since June, but actually pushed up and off that line last week in a pretty decisive move. In the process, the Dow Jones Financial Index also worked its way back above the 50 day line (purple). In fact, last week's close at 606.15 was the first close above the 50 day average line since June 2nd, and the first decent (sizable) close above the 50 day line since May. So, this is clearly not the same bearish index we were watching just a few weeks ago.

Equally important was the push off of the long-term support line (dashed) that extends all the way back to early 2003. This line was actually defined last October's low of 510.24, but obviously came back into play in the last couple of months. We also see a bullish stochastic cross, which has a little more meaning when joined with the push off of a key support level and a cross back above long-term averages.

The question is, can the financial stocks survive and thrive if the rest of the market slips back into a downtrend? The answer - that depends on the degree of downtrend. If the overall market just trades water, the financial stocks have a great chance of following through o the recent bullish move. If the market sinks like it usually does this time of year (but don't assume that it will this time), then no, even the financial stocks won't have much to offer in the way of bullish returns. For that reason, keep a close eye on both. Given the tentative nature of the call, we're not setting a target and stop this time around. 

Dow Jones U.S. Financials Index  (DJUSFV) - Weekly

Price Headley is the founder and chief analyst of BigTrends.com.