Look To The Financial For Direction
Here we are looking at the Financials ETF (XLF). When I am trading I am always watching XLF. Why? Because when financials are down most likely the broader indexes are down as well. There is increasingly more bullishness on the street, including myself, but without the financials on our side it will be difficult to form a bottom here. As I said yesterday today was very important from a technical standpoint. First the XLF is back under its trendline. Second there is still a lot of uncertainty in the economy. Also note the stochastic and MACD negative divergence.
I posted yesterday that $136 was an important short term support level that I thought needed to hold in order for further rallies. It looks like we will see further consolidation before we can make a move higher. A potential area of support on the daily time frame is $135. If that level can hold we may see a bounce.
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