Goldman Sachs reported strong second quarter earnings this week, which undoubtedly has many potential investors wondering if financial exchange traded funds (ETFs) are worth considering once again.

Despite Monday’s advances, the technical picture looks weak for financial companies, says  Michale Kahn for Barron’s. Kahn explains that putting money into your bank account may be a better bet than putting money into banking stocks. Is it true?

A weak sector may look enticing and cheap to investors, and many investors who are feeling encouraged by Goldman Sachs’ (GS) stellar earnings report might be wondering if it’s time to wade back in.

To be sure, financials have made good strides since the March 9 market lows. Some ETFs are up 80% and 90% or more since then. However, most of these ETFs still remain below their long-term trend lines. Our strategy is to focus on those areas that have crossed above this point.

Earnings season is only just beginning – can other banks that have yet to report match Goldman Sachs’ earnings? A clearer picture of this sector will emerge by the end of the week. Upcoming earnings include: J.P. Morgan Chase (JPM) tomorrow and BB&T (BBT), Citigroup (C) and Bank of America (BAC) on Friday.

  • iShares Dow Jones U.S. Financial Sector (IYF): down 6% year-to-date

  • Financial Select Sector SPDR (XLF): down 4.7% year-to-date

  • Vanguard Financials (VFH): down 7.6% year-to-date

For more stories about financials, visit our financial category.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.