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Who is Going to Save the Day?
Most market watchers would agree that a sustainable market advance
should have quality leadership. The banking sector generally is a
pretty good candidate to provide such leadership, but over the past 6
months, banks have been amongst the worst performers.
As you can see from figure 1, a weekly
chart of the S&P Select Financial SPDR Fund (symbol: XLF), the
banking sector peaked in February, 2011 and this ETF has been in a
downtrend since. More importantly, there is a key pivot point (red dot)
at 14.76. Key pivot points represent the best areas of buying
(support) and selling (resistance). A weekly close below this level
(14.76) would be an ominous sign for XLF and the markets in general.
Figure 1. XLF/ weekly
But wait a minute, look at the oval with the 3 red dots. This was 1
year ago, the summer of 2010. The blue up arrows show a weekly close
below a key pivot point. This should have been bearish, but then came
Ben Bernanke and QE3 to save the day. The market reversed and you know
the rest of the story.
Bottom line: XLF is sitting at support levels. A breakdown would not
be market positive. For obvious reasons, the financial sector is
important to watch. If XLF does break down, who is going to save the
day?
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Congratulations!!!
You've officially passed Leo as the most worthless contributor. Thanks for an absolute waste of 5 minutes of my life.
I'll miss the sea, but a person needs new experiences. They jar something deep inside, allowing him to grow. Without change something sleeps inside us, and seldom awakens. The sleeper must awaken.
Next stop; Geidi Prime
We care not for saving the day, that will be worked on sometime in the future.
The manipulators don't care about pivot points, except to squeeze people who play them. That's not to say technical analysis is not helpful. It's just that Ben and the Boyz are looking at the same charts and are varying their dance steps to trip up the bears.