Stocks closed near their lows Thursday after crawling along the flat line for most of the session in lackluster trading, as investors paused after the recent market run-up and ahead of the Federal Reserve’s policy-setting meeting.
Most key S&P sectors closed in the red, pressured by materials and financials, while telecoms finished higher. The financial sector was pressured by the underperformance of most large banks as investors attempted to gauge the impact of a slowdown in the mortgage industry after US Bank (USB) announced that its mortgage revenue fell roughly 20% in the third quarter. JPMorgan Chase (JPM) was the weakest performer among the majors while the broader sector lost 0.7%. As such, the Financial Select Sector SPDR (XLF) fell 0.71% to 20.15. Below is an update look at a trade in XLF.
The graphic below is from our “U.S. Market ETF Trading Map”, which show the near-term technical bias and trading ranges for XLF. 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 – Financial Select Sector SPDR (daily)
As indicated in the above chart, our “U.S. Market ETF Trading Map” rates XLF as a Hold. Over the past few days, XLF had been basing sideways near support at the trend channel moving average (as represents by the white line in the chart) as traders digested the late August massive gains. Money Flow measure trended lower from above the zero line, suggesting buying pressure had eased. Over the next few days, traders should monitor trading behavior as the July falling trend line, near 20.30, is tested as resistance…Click here to read more.
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