NEW YORK (TheStreet) -- The broader markets are slightly higher along with the Financial Select Sector SPDR ETF (XLF). TheStreet's Debra Borchardt spoke to Mark Newton, chief market technician of Greywolf Equities, about the financial sector and potential hurdles.
Newton said financials peaked in July, followed by a four-month pullback in the sector. In November the financials staged a strong rally, he added, but now financials are again losing some steam.
Some of the current weakness may be due to deliberations in Congress over the Volker Rule, which bars most trading by banks for their own accounts and profit. The rule could be weighing on equity prices and should concern investors, he added.
The Volker Rule has been causing quite a stir, with some arguing that it should be more strict while others say financial institutions need to be able to take more risk to spur further economic activity.Coupled with the fines some banks will likely face in the coming months -- such as the ones JPMorgan Chase (JPM) recently paid -- the sector could begin to underperform, Newton concluded. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell