XLF Financials Weekly and Daily Charts

The financials are rolling over as highlighted over the last couple months with the topping drama. The brown dots show price extended above the MA ribbons, for both the weekly and daily charts, which begs for a reversion to the mean. The red lines show universal negative divergence across all indicators for both the weekly and daily charts, an ominous set up. The daily chart shows weak and bleak indicators with lower lows so even if the XLF bounces, lower prices are desired moving forward.

Traders believe in the financials and despite each broad market pull back this year, the confidence in financials is one of the main fuel sources driving markets higher this year. Central banker easy money and banks and financials are all in the same bed creating the market upside orgy this year. Lower financials will take a big portion of the market upside strength out of the picture, and follow the negative vibe in the real estate and retail sectors that provided strength earlier in the year only to now show instability as well. U.S. regulators are after the banks, as well as the SEC, DOJ, since government officials realize when the people lose confidence in financial institutions and markets, the country has a big problem on its hand. The banks were bailed out by the taxpayer and these folks are wealthier than ever, and the too-big-too-fail banks are larger than ever, while average Joe is the sucka holding the bag. Therefore, tighter scrutiny on the financials will create further weakness in financials. Banks have billions set aside for legal costs moving forward but that may not be enough, especially if the government is after you.

XLF 20.12 is the bull-bear line in the sand identified by Keybot the Quant, Keystone's proprietary algorithm.  Bulls will keep the party going a short while longer if XLF stays above 20.12. If the 20.12 level fails, the SPX will likely drop from 5 to 20 handles. Projection is lower prices for the weeks and months ahead. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.