Financial heavyweights JPMorgan Chase (JPM) and Citigroup (C) kicked off the third quarter earnings season on Thursday morning. Both lenders reported better-than-expected earnings and revenues, but moved lower nonetheless, tumbling 0.9% and 3.4%, respectfully. The iShares US Financial Services ETF (IYG) fell 0.81 percent to 121.16. Now the question is whether this is a pause that refreshes or it’s a beginning of something worse? In fact, according to our “U.S. Market Trading Map”, Thursday’s selloff indicated an impending bearish reversal. Below is an update look at a trade in the IYG.
The graphic below is from our “U.S. Market Trading Map”, show the near-term technical bias and trading ranges. As shown, the underlying is in a short-term bullish trend when the price bars are painted in green. The underlying is in a short-term bearish trend when the price bars are painted in red. The yellow bars identify period of neutral or sideways trading pattern. Additionally, the light-blue shading represents the short-term trading range. A move above or below that range is considered overbought (as represents by the red shading) or oversold (as represents by the dark-green shading). Readings above or below the red and green shaded areas are considered extremely overbought or extremely oversold.
Chart 1.1 – iShares US Financial Services ETF (daily)
Our “U.S. Market Trading Map” painted IYG bar in red (sell). After a strong run of outperformance since early September, IYG peaked in early October at 122.55. Thursday’s bearish breakout suggested that the one-week triangle pattern had resolved itself into a new downswing. Right now follow-thought is the key. A downside follow-through tomorrow will confirm Thursday’s bearish signal and trigger…Click here to read more.
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