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With the major equity market ETFs down about 1.0% to 1.5% this morning, the Financial Select Sector ETF (NYSE: XLF) acts slightly better. One look at the enclosed daily chart of the XLF and we notice that today's weakness has not (yet) inflicted meaningful damage to the July-August uptrend (10.83 to 14.69). In fact, early weakness pressed the XLF towards a test of key near term support at 14.40, but 14.46 contained the selling pressure, which has given way to buying that has returned the price structure to 14.60/63. As long as 14.40 remains viable support, the XLF will retain its bull trend (higher-highs and higher-lows). And although we notice that daily momentum (RSI) is not confirming the late-August high, which is a big warning signal to holders of long positions, unless and until price breaks and sustains key support (14.40), I have to view the overall technical situation as positive-- but deteriorating. That said, we should not be surprised to see the XLF climb to 15.00-15.30 prior to a meaningful price peak. MJP 8/31/09 11:30 AM ET (14.64)
Mike Paulenoff is author of www.MPTrader.com, a real-time diary of his technical analysis & trade alerts on ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international markets, plus key ETF component stocks in sectors like technology, mining, and banking. Sign up for a Free 15-day Trial!
