Always consider hidden risks
Financial Sector (XLF) : Rates Driven? 
 January 18 2017 ( From Tradingview  )
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​​​​​​​​​​SP500 ​Financials (XLF ETF)​ previous peak was made on December 15
​2016 then ​at 23.87, level last seen back in February 2008.
Two months ago was the Trumpification of Financial Markets as
​pro-growth ​and reflation protectionism bias repriced violently all
​SP500​ Major Market Sectors. Sectors winners: Financial and Industrial,
​Sectors losers: ​Interest rates sensitive: Utilities and Consumer Staples.
​The Stock Market is already re pricing some excess since the election.

​​​Since the November 8 election date, XLF ETF (unadjusted for dividends)
is up +14.8% (as of closing of January 17 2017. But very few of us
realize that we never got back above the Weekly Major Resistance
Trendline that started back since October 2011!​ ​​
 (See first chart below - Yellow Trendline)

Since December 8, the XLF ETF traded in a Narrower Trading Range to create a tiny Daily Uptrend Channel Technical Pattern​.​ ​(See second chart below - Channel) Those Lower Highs and Higher Lows with sub volume finally broke on January 17 the Support of that Uptrend Channel.  What very few of us realize is that the XLF ETF behavior especially since the election are driven by interest rates. (See second chart below - Top Panel - XLF ETF candles - US 10 Year Note Yield Amber Line). 

T​​he correlation between those two financial asset (XLF ETF and US 10 Year Note Yield) is sharply on the rise since January 6 2017. (See second chart below - Bottom Panel of the Chart - Blue Area)​

​​In fact, the Financial Sector are under performing the Mighty SP500 Index ​(Ratio of XLF ETF over SPY ETF) since December 8 2016 after a strong price compression on a Relative Basis (tiny Falling Wedge).​ It did break finally on January 17 2017, the Support Trendline that started back since September 30 2016. (See third chart below - Yellow Trendline) And also on January 17 2017, broke the 50 DMA (Day Moving Average) on a relative basis, a bad omen indeed. (See third chart below - Red Line - Ellipse)

​​A good performance from XLF ETF is quite needed for Bulls as it represent 16.2% of the SPY ETF total allocation and is the second heaviest sector (first sector is Technology at 18.6%). So without it, it will be quite difficult for Bulls to achieve new highs to the SPY ETF.

​​​​​I think the broad market (SPY ETF) need the Financials to continue to perform well; as we are still in Strong Price Compression on XLF ETF, it is becoming almost mission impossible to reach a new high in the SP500 Index without their participation. 

Having broken the Daily Support of the Uptrend Channel price wise and the Support Trendline on a relative basis does not bode well for the Financial Sector on a short term basis. I think that will bring more Volatility in the market especially with a weaker US Dollar lately...​


Financial Sector (XLF) : Rates Driven?    $SPY, $XLF #Trading #Investing #xlf #SP500 #stocks #financials #risk

SP500 Financial Sector (XLF)
over SP500 Index (SPY ETF) 
​20 DMA ( Day Moving Average - Yellow Line )​
50 DMA ( Day Moving Average - Red Line )​​
200 DMA ( Day Moving Average - Green Line )​

SP500 Financial Sector (XLF) - Weekly Candles
​4 WMA ( Week Moving Average - Yellow Line )​
12 WMA ( Week Moving Average - Red Line )​​
52 WMA ( Week Moving Average - Green Line )​
SP500 Financial Sector (XLF) - Daily Candles ( Top Panel )
​20 DMA ( Day Moving Average - Yellow Line )​
50 DMA ( Day Moving Average - Red Line )​​
200 DMA ( Day Moving Average - Green Line )​
US 10 Year Note Yield ( Top Panel - Orange Line )
Correlation between XLF ETF and US 10 Year Note ( Bottom Panel - Blue Area )​​