One of the noteworthy developments in recent days has been the move in the financial sector. The group was under selling pressure in recent days as banks stocks were weighed down by a sharp drop in longer-term Treasury yields. After a strong run of outperformance in 2017 that saw the Financial Select Sector SPDR ETF (XLF) soared 20 percent, the ETF is holding near the unchanged mark YTD while the S&P rose more than 6 percent. Now the question is whether recent selloff is a pause that refreshes or it’s a beginning of something worse? Below is an update look at a trade in XLF.
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.
Chart 1.1 – Financial Select Sector SPDR ETF (daily)
Our “U.S. Market Trading Map” painted XLF bars in green (buy) – see area ‘A’ in the chart. The first dominant feature on the chart is the rising trend line starting in early 2016. The second dominant feature of the chart is the downward trend since early 2018. The June downswing retested and respected support at the 23.6% Fibonacci retracement of the 2016-2018 upswing. The July rally pushed the ETF above the 2018 falling trend line, signify…Click here to read more.
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