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Strong Upmove in Financial Stocks XLF ETF Smacks Into Stronger Downtrend

Stock-Markets / Exchange Traded Funds Aug 09, 2009 - 01:19 AM GMT

By: Mike_Paulenoff

Stock-Markets

Best Financial Markets Analysis ArticleThis week¹s surge in financials in general and the TARP banks in particular ran the Financial Select Sector ETF (XLF) from last Friday¹s close at 130.01 to Thursday¹s high at 14.35, or 10.3%. However, as powerful as the upmove might have been, and still is, it may not be more powerful than the two-year down trendline that cuts across the price axis currently in the vicinity of 14.30.


This is a classic case of a strong near-term upmove smacking into a stronger intermediate-term downtrend. In the vast majority of similar situations, the near-term upmove fails on its first attempt to hurdle and sustain above the more dominant medium-term downtrend.

My near-term work is telling me that the current situation in the XLF will not be the exception: the price structure may make another attempt or two to hurdle and sustain above 14.35, but will fail ultimately and reverse into a correction that presses towards a retest of the breakout plateau at 13.20-13.00.

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By Mike Paulenoff

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com) , a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of

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