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Financials Looking Stronger


Financials Looking Stronger
By Mike Paulenoff, www.MPTrader.com

An interesting technical situation continues to develop in the XLF. Let's notice that last Wed.'s low at 22.33 not only hit and held at the lower channel support line, it also represented a potentially important secondary low within a March-June Double Bottom formation, the first low of which occurred during the Bear Stearns debacle, at 22.21 on 3/17. In addition, in the aftermath of last Wed.'s low at 22.33, the XLF has since clawed its way across the price channel to test the upper resistance line at 23.75, which for the time being has contained the rally effort. From a near term technical perspective, the XLF must hurdle and sustain above 23.75 to trigger more important initial buy signals, which also will strengthen the likelihood that that last week's low indeed, was the second low of a developing powerful Double Bottom formation. For now, however, we must wait for more "data ponits" (price action) before concluding that a significant low was established last week. The action could take the form of backing and filling into a retest of 22.50/30, or the XLF could just move sideways ahead of a thrust above 23.75. In either case, my overall technical work in the XLF strengthened considerably.

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