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Financial Select Sector SPDR ETF Message Board

  • keybotthequant keybotthequant Jan 10, 2013 9:52 PM Flag

    XLF Chart and Technical Analysis Negative Divergence

    Tomorrow is the big day for financials with the WFC earnings release. AXP pre-released earnings early tonight and met on the bottom line but was a shade light in revenue on the top line. WFC will immediately impact futures in the morning and set the tone for trading for Friday. The XLF is in an upward-sloping channel, however, a hanging man candle prints today and negative divergence is in place (red lines). The stochastics and RSI are overbot. Note that the last seven days have created an island so a potential island reversal pattern is in play where price would drop to 16.80, then fail, printing sub 16.6 in a heartbeat. Key support levels are highlighted with the black lines. The volume interest trails off lower as price rises. The weekly chart is negatively diverged.

    The projection is for the financials to roll over and head sideways to sideways lower for the days and weeks ahead. This is important since traders are expecting financials to lead the markets higher. If WFC reports blow-out earnings, obviously, XLF will pop higher, but that will likely lead to a roll over in the days ahead. If WFC disappoints it will serve as a catalyst to kick the downside into gear for financials. The bulk of the banks report earnings next week. All eyes are on the banks.

    For the XLF chart, as well as the weekly and daily WFC charts for tomorrow, use search box above for Keystone Speculator

    Sentiment: Sell

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