By Doug Busch
The financial sector has quietly emerged as the market's weakest link.
The State Street Financial Select Sector SPDR ETF is the worst-performing major S&P sector, down 4% since the start of the year to trade 6% below its Jan. 6 peak.
Weakness is showing up in the ETF's largest holdings, Berkshire Hathaway, which has dropped about 12% from its most recent 52-week high to trade below both its 50- and 200-day simple moving averages. The stock has declined six of the past eight weeks. Its weekly chart suggests downside room toward the $440 level, where a potential double bottom could develop.
Regional banks, via the State Street SPDR S&P Regional Banking ETF, printed a bearish evening star pattern on Jan. 23, sliding 3.3%. The decline followed a nearly 5% rally just two sessions earlier, the fund's biggest single-day gain in five months.
Policy risk has also weighed on parts of the sector. The Trump administration's efforts to cap credit card interest rates have pressured payment processors, with Visa and Mastercard down 12% and 13%, respectively, from their 52-week highs. Among recent IPOs, Wealthfront has been a clear disappointment, falling nearly 40% from its first-day peak on Dec. 12. Meanwhile, Fannie Mae has been cut in half since forming a bearish dark cloud cover pattern on Sept. 12.
In light of these conditions, we turn to three names that appear to have further downside from current levels.
Robinhood Markets, while up 95% over the past year, has dropped 31% in the past three months. The stock has fallen 10 of the past 16 weeks and is off 6% so far this week, highlighting persistent downside pressure.
On the daily chart, round number levels have been significant. A bearish engulfing candle on Oct. 6 near $150 marked the top within a bearish head and shoulders pattern. The stock is now resting near the round $100 level, the neckline of that formation. A break below could see a decline toward $50, a 50% drop from current prices, and retest the breakout above the prior double bottom pivot at $49.98 from May 8. Robinhood has repeatedly faced resistance from its 21-day exponential moving average and today fell below its 200-day simple moving average. Remain bearish below $109.
Robinhood Markets was trading around $101 Thursday.
PayPal Holdings has been under significant pressure since November, declining 11 of the past 13 weeks and falling another 6% this week. The stock now trades 42% below its most recent 52-week high and is already down 9% year to date.
The three-year weekly chart highlights how depressed the stock trades. Shares are below both the 50- and 200-week simple moving averages, with a failed attempt to reclaim the latter marked by two bearish shooting star candles last October. Relative performance has also deteriorated, as the stock has trended lower versus its peers over the past year, evident in the ratio chart against the XLF benchmark. While earnings next week could spark a short-term bounce, the general trajectory remains firmly lower. Remain bearish below $61, with downside potential toward $40 by mid-2026, a decline of roughly 25% from current levels.
PayPal Holdings was trading around $53 Thursday.
Blue Owl Capital, an alternative asset manager, is down 44% over the past year. The stock sits 46% below its peak from exactly one year ago and is heading for a second straight weekly loss of 5%.
The weekly chart shows that weakness is nothing new for this stock. Blue Owl finds itself on a five session losing streak and previously broke below a bearish head and shoulders pivot at $15. It then retested that level and rolled over again, confirming the breakdown. At the top of the pattern, three doji candles had signaled potential trouble, warning investors of the late 2024 and early 2025 drawdown. Blue Owl could pull back toward the round $10 level by mid-2026, implying a further decline of 30% from current prices. Remain bearish below $15.25.
Blue Owl Capital was trading around $14 Thursday.
Overall, the financial sector continues to show cracks from the top down, and with multiple names under pressure, the path appears tilted toward further downside in the weeks ahead.
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 29, 2026 14:31 ET (19:31 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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