Will the third time be the charm for Financial Select Sector SDPR (XLF)? The financial ETF’s recent rally has carried the fund to a key resistance level for the third time since 2010.
XLF is threatening to break out to its highest levels since 2008 when the wheels came off during the financial crisis.
The sector ETF has been steadily outperforming the S&P 500 since the summer of 2012 despite lingering fears over Europe’s debt crisis and the U.S. deficit.
Last year, XLF rallied 28.4% while the S&P 500 posted a total return of 16%, according to Morningstar.
The financial fund rose above $17 a share on Wednesday and this price level has provided stiff resistance the past four years, as the chart below shows.
“So goes the banks so goes the broad market … it has worked that way for years, so keep this important sector in mind for the macro picture,” Kimble Charting Solutions said in a note Wednesday.
Financial Select Sector SPDR
Full disclosure: Tom Lydon’s clients own IYF.
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