Wednesday, April 9, 2014

XLF Financials Weekly Chart

The red rising wedge, overbot stochastics and negative divergence (red lines) spank price lower. The previous brown rising wedge, overbot conditions and negative divergence created the smack down to begin the year. It is actually surprising that price came up to print a higher high a couple weeks ago. The upper pink standar deviation line was violated so price needs to touch the middle band, the 20-week MA, at 21.63. The low print is 21.68 which did not show a lot of respect to the 20-week so another test is likely. Note how the financials have maintained the 20-week MA for two years. Prices and charts always revert to the mean.

In the very near term, the RSI and stochastics are printing lower lows (red lines) showing weak and bleak behavior moving forward. Price is not yet lower comparing the same time frame over the last five weeks so this behavior acts as a weight on price desiring to pull price lower. A move to retest the 20-week MA at 21.63, then lower to test the lower standard deviation band at 20.80-21.00 would be expected as the weeks play out.

Keystone's proprietary trading algorithm, Keybot the Quant, identifies which sectors and areas are most greatly dictating broad market direction in real-time and currently financials (XLF) and volatility (VIX) rule the roost. Keybot identifies XLF 21.87 as the bull-bear line in the sand. Price begins today at 21.86 one penny on the bear side causing market negativity. Market bulls win big if XLF moves above 21.87. Market bears win big if XLF remains under 21.87 and moves lower.

Overall for financials the projection is sideways to sideways lower 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.

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