Financial ETF Is Squeezing Higher
The SPDR Financial ETF broke out to record highs in February, stalled in June and has been resting since. Now it may be getting ready for another move.
The first pattern on this chart is the 50-day simple moving average (SMA). After dancing around this line for almost four months, XLF has managed to hold above it since the end of September. That’s especially noteworthy because, aside from
SPDR Energy, every other major sector ETF is under its respective 50-day SMA. (Along with the entire S&P 500.)
Next, the last bounce represented a higher low than the September 20 trough. That also contrasts with the broader SPX, which made a lower low.
Switching to the weekly chart, notice that XLF rebounded so quickly from the first drop that it formed a bullish outside week:
The macro backdrop may also support financials because the yield curve is steepening as rates increase. Several big names, including
JPMorgan Chase, 
Bank of America and 
Goldman Sachs report next week. XLF may need a little more time given weakness in the broader market. But as long prices hold the 50-day SMA, traders may look for the trend to continue.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
The first pattern on this chart is the 50-day simple moving average (SMA). After dancing around this line for almost four months, XLF has managed to hold above it since the end of September. That’s especially noteworthy because, aside from
SPDR Energy, every other major sector ETF is under its respective 50-day SMA. (Along with the entire S&P 500.)Next, the last bounce represented a higher low than the September 20 trough. That also contrasts with the broader SPX, which made a lower low.
Switching to the weekly chart, notice that XLF rebounded so quickly from the first drop that it formed a bullish outside week:
The macro backdrop may also support financials because the yield curve is steepening as rates increase. Several big names, including
JPMorgan Chase, Bank of America and Goldman Sachs report next week. XLF may need a little more time given weakness in the broader market. But as long prices hold the 50-day SMA, traders may look for the trend to continue.TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
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