XLF Financials Weekly Chart; Sideways Channel; Price Pivoting at 20 and 50-Week MA's

Financials take the pipe over the last six days. This is especially interesting considering that the yield curve steepens slightly. XLF loses -4.0% last week and the KRE (regional banks) is beaten -4.6%. That's going to leave a mark.

The red lines show the overbot conditions, rising wedge and negative divergence that created the top and smack down to begin the year. The banks are stumbling sideways through the blue channel at 26.5-29.0. Banks rally from the bottom rail to the top rail of the channel and then are punched in the face last week. XLF collapses.

The chart is not tipping its hand from a technical standpoint, however, something very special is happening. Price, the 20-week MA and 50-week MA are all at the same number at 27.58-27.64; call it 27.60.

XLF is going to pivot up or down from 27.58-27.64 during the days ahead and its direction will greatly impact the broad stock market. Stock market bulls win big if the XLF moves higher above 27.64. This will open the door to another test of the top rail at 29.00 and that will lead to bigtime stock market record highs.

Stock market bears need XLF to remain under 27.60 and continue lower which will lead to market mayhem. The bears will then target the lower channel line at 26.5 and if that fails, look out Nellie. It will not be good for the stock market if the banks are falling apart.

Keybot the Quant is currently short and the algo is tracking XLF 28.05 as a key bull-bear line in the sand. This creates negativity in the broad stock market. If the bulls push the XLF above 28.05, they have got some serious strength. Bears will generally remain in the ball game as long as price does not move above 28.05. Interestingly, the KRE failed through its 20 and 50-week MA's last week. 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.