Canadian bank stocks have not only been significant out performers they are arguably the most steady and reliable investment on any stock exchange in the world. Last week, bank stocks underwent heavy selling and, on several measures, triggered sell signals. What is behind the new development?

The sell off occurred during trade talks between Canada and the United States. On Saturday, when the stock market was closed, it was announced Canadian Prime Minister Mark Carney had "walked out" of the negotiations. The sell off in bank stocks preceded the announcement. Some big investors had knowledge of a divide between the negotiating parties and used it to reduce positions. 

But since the consolidation took hold, the action in bank stocks has been mixed. Most noteworthy, the Bank of Nova Scotia (BNS-u.s., BNS-tsx) bolted higher on earnings to a new high. But an attempted bounce has failed in RY, CM, NA and BMO while TD closed higher for three straight days of gains.

Institutional investors, who are primarily mutual funds and pension funds, are notorious for significant buying or selling on earnings results. What typically happens is stocks in the same sector will follow in the same direction, but not this time! Most of the sector continues to work through a consolidation. Despite powerful earnings, mutual fund managers are mixed on their outlook with more of them maintaining a bearish outlook.

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Stock market analysis, screened stocks and ETFs on the TSX and U.S. markets and real world strategies for staying on track.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​