Monday, August 7, 2017

XLF Financial ETF Weekly Chart; Banks at One-Decade Highs; Rising Wedges; Overbot; Negative Divergence; Price Extended

The XLF is at record highs going back 10 years to 2007. The XLF peaked at 30.99 on 5/31/07 and the banks are now knocking at the 25-31 door again. The banks leap higher starting last November since investors think that President Trump's infrastructure spending and other programs will lead to inflation and higher rates. The expectation is that the 2-10 spread will widen providing an easier path for banks to make profits. Everybody and his bro are loaded up with banks. Aunt Nellie, typically very fugal with her money, dug up her entire life savings from under the patio and placed it all into the large money center and several regional banks like the guy on television advised.

The long-term rising wedge is ominous since the price collapses out of this pattern can be extremely ugly. A rising wedge is also in play this year. The XLF is coming off the overbot levels, stoch's remain overbot, which are agreeable to a pull back. The red lines for the indicators show universal negative divergence. Price is out of gas as it prints new highs. if you enjoyed nice profit in the banks to date, hit the sell button and exit. The XLF likely needs to come back down to tap that lower trend line again. It will be interesting to see if the banks can ever overcome the 2007 highs, or not. The XLF is set up to take a rest for a few weeks as per the neggie d. 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.

Note Added 4:46 PM EST: The XLF ends the session at 25.35 slipping a small -0.2%.

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