FINANCIAL ICEBERG
Always consider hidden risks
 TECHNICALS
Financial Sector (XLF) : Price Compression? 
 October 26 2016 ( From Tradingview  )
If you would like to receive our free daily markets updates, please Sign-Up



​​The Situation

​​​​​​​​SP500 ​Financials (XLF ETF)​ previous yearly peak was made on
​September 1 2016 then ​at 20.00, level last seen in the mini rally of 
​December 2015.​ 
​​(See first chart below)​  It did reach a second time on  
​September 2 the 20.00 level creating then a new Resistance Trendline
technical pattern. (See first chart below - Top Grey Trendline)

Since then, the XLF ETF traded in a Narrower Trading Range to create
a tiny Wedge Technical Pattern​.​ 
​(See first chart below - Blue Trendlines)
Those Lower Highs and Higher Lows with sub volume is bringing a
strong Price Compression that will lead sooner than later to more Volatility.​
(See First Chart Below - Bottom Panel of the Chart - Blue Line - Yellow Trendline - Ellipse)​

​​In fact, the Financial Sector are out performing the Mighty SP500 Index ​(Ratio of XLF ETF over SPY ETF) only since September 29 2016 after creating the Support Trendline on a Relative Basis.​ It did break on October 19 2016, the Resistance Trendline that started back since August 10 2015. (See Second Chart Below - Top Grey Trendline) Now testing the last Resistance Trendline for Bulls. (See second Chart Below - Top Blue Trendline)
​​​​​

​​​With the last down move since September 29, we are now on a relative basis way above the 20 DMA ​(Day Moving ​Average), the 50 DMA and most importantly the 200 DMA on a relative basis (See second chart below - Green Line)​ . That shows how strong the sector is compare to the broad market (SP500).

But what is interesting indeed is that the Financial Sector is strenghtening lately to the Mighty SP500 Index, as the economic surprise index is on the fall and also that the FED keep pushing away the next interest hike, fading some hope for banks on fatter forward net interest margin.

A good performance from XLF ETF is quite needed for Bulls as it represent 13.1% of the SPY ETF total allocation and is the third heaviest sector (first sector is Technology at 21.7%). So without it, it will be quite difficult for Bulls to achieve new highs to the SPY ETF.

We must take note that the XLF ETF (US Financials) is almost at the highest valuation on a relative basis compare to its International peers taking the IPF ETF as a proxy (SPDR SP International Financial Sector ETF)
which is based on the S&P Developed Ex-U.S. BMI Financials Sector Index. 

​​​​I think the broad market (SPY ETF) need the Financials to continue to perform well; as we are still in Price Compression on XLF ETF, it is becoming almost mission impossible to reach a new high in the SP500 Index without their participation. Next break of that Wedge will be significant for the whole market...

​​​​​​

.






​​
​​
Financial Sector (XLF) : Price Compression?    $SPY, $XLF #Trading #Investing  #xlf #SP500 #stocks #financials

Daily RATIO
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) - Daily Candles
​20 DMA ( Day Moving Average - Yellow Line )​
50 DMA ( Day Moving Average - Red Line )​​
200 DMA ( Day Moving Average - Green Line )​
Financialiceberg.Com
Financialiceberg.Com
Daily RATIO
SP500 Financial Sector (XLF)
over S&P Developed Ex-U.S. BMI Financials Sector Index (IPF ETF) 
​20 DMA ( Day Moving Average - Yellow Line )​
50 DMA ( Day Moving Average - Red Line )​​
200 DMA ( Day Moving Average - Green Line )​
Deutsche Bank AG (US$ - Amber Line )​
Financialiceberg.Com