Financial sector was laggard in the last February market bullish movement. Now it seems scenario has changed. Financial sector ETF XLF looks bullish and other financial major wall street firms including GS, JPM, C, MS charts also look bullish.
XLF is the financial ETF for S&P 500 index. ETF closed below august 24 2015 low at February 11 with strong gap down. Gap down with strong volume was indicating that stock would go down further. However, at the end of the day doji closing of the ETF signaled this gap down could be the last good day for bear and immediate reversal is close. Next day XLF gap up and open above the previous day high and closed very strong with long green candle. Chartists knew this is very bullish sigh for reversal and entry is anywhere in the green candle. Market technician was right in their assumption. ETF started its bullish move from 2/12/2016 and more than 22 % move just two and half months without any major pull back.
ETF today closing signals another bullish move may be ahead. ETF gaped down in the morning after yesterday big red day. This seems to be bearish for the traders at the beginning. However, after ETF came to 23.50ish area, etf reversed its move. This area is also short term support area for the stock. As ETF moved above the opening in the morning, two things happened. First, ETF closed the small down side gap. Second, since ETF able to come back to its morning open, means short term day traders or scalpers are out from the bearish position and a new group of bullish trader over took the control of the ETF.
At the end of the day ETF closed above green line. This green line is the place where ETF massive downtrend started with big gap down. ETF lost more than 20 % of its value on that down move and put it in the bearish market territory. Etf closed above the blue line clearly signal bull strength in the market and future movement of the ETF to the up side is expected.
From the chart we see that XLF was on the big triangle pattern. ETF could break up or break down to either upside or down side. However, we watched ETF broke up in the upside. After broke up to the up side, ETF retested its support line and started to move upside.
Another point is ETF todays reversal movement to the upside. This clearly shows that more stock traders or investors are willing to take position on the up side.
3rd point is that ETF is currently on the support zone. Even ETF broke to the down side, ETF will get support on the support area and falling down below this area would be difficult if market showed its continuous strength to the up side.
4th point is ETF did not make that much bullish move as other sector made in the current bull market. Since Sector rotate, financial could be one which can made big move in the future.
5th point is ETFs’ powerful components charts looks bullish. This could be a signal that ETF would move up side.
6th point is ETF is currently holding above all the major simple moving averages, this is also sign for bullishness for the etf. ETF made small pull back because it was on the upper band of the Bollinger last week. Some day traders short ETF to take advantage of that and some people were taking profit after long move of the etf.