XLF Financials ETF Daily Chart; Banks Print Historic Record-Setting 13 Consecutive Down Days; Descending Triangle; US 2-10 Yield Spread Narrows to 31 Bips Representing a Flatter Yield Curve

The XLF is down for 13 consecutive down days for the first time in history. The descending triangle, a bearish pattern, jumps out at you. Last Thanksgiving, financials gapped higher from 26.60 to 26.80 creating a key support level for the next seven months and counting.

The XLF failed below the base of the triangle at 26.80. The vertical side is 3 bucks so the downside target is 23.80 and this lines up with the support from last September. Price usually back kisses once it fails so a move back up to 26.60-26.80 would be expected where XLF will decide to either bounce, or die.

The oversold RSI, stochastics and money flow are agreeable to at least a dead-cat bounce. Ditto the MACD line and histogram displaying positive divergence. Price has violated the lower standard deviation band so the middle band at 27.37, and falling, is on the table. There is lots of near-term downside momo, however, and the money flow is weak and bleak. The selling volume during the 13-day record-setting slide is robust (purple circle).

XLF will likely chop sideways for a few days with the back kiss of the triangle base line in play. The weekly chart is also showing indicators mixed between possie d and neggie d hinting at sideways chop in the weekly time frame. The yield curve flattens with the 2-10 spread falling to 31 bips today a decade low. KRE, the regional banks, are hit more than the larger money center banks as the yield curve flattens. If Treasury yields move higher (steeper yield curve), XLF will likely recover in this daily time frame. 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 Wednesday, 7/4/18: Banks chop around sideways after the stress test results with a downward bias. XLF is at 26.40 spending time the last couple weeks back-kissing the triangle base line and the 50-week MA at 26.94 which is now major resistance. The 2-10 yield spread briefly printed 29 basis points. XLF daily chart is set up with possie d so a bounce for banks is likely in the daily time frame. The weakness in the XLF weekly chart, however, should resurface after a few-day rally for the financials.