Seen In The On Deck Circle – Financial Select Sector SPDR

• Posted by Greg Harmon
• on January 5th, 2012

It was a banner day for Financial Stocks with the broad Financial Select Sector SPDR, $XLF, finishing up 1.35% and above the long term support/resistance line at 13.25 as shown on the daily chart below. It even broke above the down trend resistance that has been in place since April.

But it has been here before when it briefly broke the trend in July for a day. It has support to move higher from a bullish Relative Strength Index (RSI) and a Moving Average Convergence Divergence (MACD) indicator that is growing. It has put in a higher high now after a higher low, also positive for more upside. But stepping back to the weekly chart shows it may be breaking the

shorter term trend line but has a long way to go still to break above the 4 and 1/2 year trend lower. And with all of the Simple Moving Averages (SMA) on this time frame converging at that trend line it will be doubly difficult. Over 14.30 is key. A final take on it from the monthly chart below shows that the Fibonacci’s a playing a significant role. First failure at the 38.2% retracement of the major move

lower during the financial crisis, signaling a weak move higher, but now holding the 50% retracement of the rebound higher from those lows. It would look a lot better over the 20 Month SMA at 14.39 and the consolidation channel looking left. Maybe it stands a chance. But things are hardly as good as they looked in the daily chart. For now it is just in the batter’s box loosening up, it could be a decoy. There are still a few major hurdles before it gets put in the line up to play.

By the way, pitchers and catchers report in only 46 days.

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