By Mike Paulenoff, www.MPTrader.com
Probably the most buoyant sector today is the financials (which may seem odd), with the major banks, brokers and investment banks all acting well -- and pushing the Financial Select SPDR (AMEX: XLF) higher. Today's strength has popped the index above key near-term resistance at 33.50, which has triggered upside follow-through that points towards a confrontation with the July-Sept resistance line at 34.00/05. Let's notice that just above the trendline resides both the declining 50 DMA (34.29) and the prior recovery peak (34.40). This means that very serious near-term resistance is clustered in the 34.00 to 34.40 area. My suspicion is that only a very positive reaction to the FOMC announcement next Tuesday will provide the impetus for a surge in the XLF above the resistance area. Right now it would appear that the more liquidity, and the more accommodation from the Fed, the more likely that the financials will take out 34.00/40. Right now, let's just say that the XLF is making overtures towards such an outcome.