The XLF is a banking ETF although it is broader based including insurance companies and other financial institutions. A death cross occurs in March and price bounces, which is expected, and price stumbles along sluggishly afterwards as long as the death cross remains in play. XLF is in a sideways stumble like the broad stock market over the last couple months.
Price is narrowing itself into a sideways triangle vibe as earnings are set to be released this week. JPM, C, WFC, CBSH, PACW and FRC report tomorrow, Tuesday, 7/14/20. GS, BK, PNC, USB, TBK, FNLC and UBFO drop their loin cloths on hump day exposing their wares. On Thursday, 7/16/20, BAC, MS, AUB, AMNB, AMRB, CVLY, TFC, SBNY, FFIN, NKSH, EBTC, HOMB, and UNTY report results. The week ends with BLK, STT, CFG, RF, FHN and ALLY on tap Friday morning.
XLF gains +0.4% to begin the new trading week to 23.55. The stories on bank earnings are dire. Oh dear Lord! The loss of humanity is worse than the Hindenburg. The poor banks lost billions; they can barely scrape by after covid. Pass around the collection plate. Yes, the negativity is rampant and traders know the bar is placed so low, in fact it is laying on the floor and even Aunt Agatha in her white orthopedic shoes can easily step over, that it is extremely likely that the earnings and top lines will beat, hence, financials rallied strong on Friday and are up today. The fun begins in the morning with JPM, C and WFC. Wells Fargo is getting ahead of the release telling shareholders a few days ago that over 30K workers will be canned in the future starting with a few thousand. This news will encourage traders to buy WFC since the workload will be placed on the back of the remaining employees increasing efficiency.
The purple channel held the price movement into June but XLF fell below the lower purple rail. The blue channel is now in play and price tested the lower rail and bounced (a successful back kiss for the bank bulls). Price moves higher the last couple days. Earnings will tell the story this week and as banks go, so goes the stock market.
You can gauge the bank movement by the moving averages. Price took out the 20-day MA at 23.40 on Friday so bears would need to push price below here for starters. Bulls rule if price remains above the 20.
Keybot the Quant algorithm remains long and is tracking XLF 23.23 as a bull-bear line in the sand. The stock market will begin trending lower if XLF 23.23 fails. Stock market bulls are in great shape if XLF remains above 23.23. The stage is set. The business media will worship at the feet of King Dimon tomorrow morning. The CEO's at investment banks and public officials at central banks are worshipped as modern-day Money God's in this New Gilded Age. Watch XLF 23.23. 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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