10/5/2018 – Financial Select Sector SPDR ETF (XLF)
The Federal Reserve Bank raised interest rates by 250 basis points last week. In percentage terms, that calculates to a .25% raise in the rate. Basis points terminology is widely used when talking about changes of less than one percent. As a result, this terminology is often used when discussing interest rate fluctuations. I prefer to use percentages myself as it is more clear. Not everyone understands "basis points".
Anyways, what effect did the rise in interest rates have on the Financial Select Sector SPDR ETF (XLF)? This recent interest rate increase was an "expected" increase by the market. The market tends to take most things in stride, especially when they are already expected. Before analyzing shorter-term price activity for the index, I am going to look at a long-term chart from an Elliott wave perspective.
Financial Select Sector SPDR ETF (XLF)
Two months ago in the Idea Chamber I mentioned that I saw a trading range starting to develop for Financial Select Sector SPDR ETF (XLF). This first chart for the XLF is a 20 year monthly candlestick chart that I think will explain why I saw that trading range developing. The long-term chart indicates that a Bullish Impulse wave pattern that started in March 2009 finally finished developing and completed Wave 5 in January 2018. Take a look at my Elliott Wave breakdown on the chart.
The blue lines on the chart represent Waves 1-5 of a Bullish Impulse wave pattern. Wave 5 of the pattern contains the extended wave pattern. I discuss what an extended wave pattern is in recent article for 3M Corporation titled "9/30/2018 - Stock Chart Analysis for 3M Corporation (MMM)"
When an extended wave pattern is identified…...
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I discuss probable short-term and long-term action for the index. Shorter-term looks like a continued consolidation for the sector for the next 1-3 months while longer term looks like......
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