I last talked about bank stocks on January 3, 2019 - this was one of my last updates before my hiatus. Specifically I was talking about the Financial Select Sector SPDR ETF, ticker symbol XLF. I use the charts from this ETF as a general guide for individual bank charts.
This first article will revisit charts for the XLF. Personally, I think the XLF is a good barometer for bank stocks as a whole population. When target prices are reached for this ETF, I think it also signals a time to take action on individual bank stocks.
Shares below the $20 price level will carry a better risk to reward ratio. Time to start monitoring it better when it reaches its main supporting trendline since March 2009.
I was talking about ticker symbol XLF, the Financial Select Sector SPDR ETF in the above comment made in the forum.
But before I dive into the charts for the Financial Select Sector SPDR ETF, why did I start out reviewing charts for banks? Banks tend to perform the best when interest rates are rising. And that has been the trend, rising interest rates, until recently. Earlier this week the European Central Bank announced its plan to forgo rate hikes and instead implement another round of quantitative easing.
Will the US central bank follow suit? That seems to be the concern causing the recent decline in bank stocks the last week. But in actuality bank stocks have been in a decline for more than a year, that is why I was looking for the XLF to pull back to its main supporting trendline during its corrective process.
Let's take a look at an updated 10 year monthly candlestick chart to see if the XLF has pulled back to its main supporting trendline yet.
The XLF has to pullback towards the $21 area to complete a pullback to its main supporting trendline. I think a pullback to the lower support area will happen during the …….
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I look at some pullback areas to begin building a long-term position in the ETF as well as the expected time frame the index will reach my target price range.
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