The finance sector continues to underperform the overall market. While the S&P 500 and Dow are consolidating near 52-week highs, the Financials SPDR (XLF) remains well below its October high and shows relative weakness. The bottom indicator contains the price relative, which is the XLF:$SPX ratio. XLF is outperforming when the ratio rises and underperforming when the ratio falls. Notice that the ratio peaked in October and declined to its lowest levels since late July. XLF is clearly underperforming the S&P 500.
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On the price chart, XLF formed a triangle consolidation over the last eight weeks. Prior to this triangle, the ETF advanced from July to October. While this triangle can be considered a consolidation within an uptrend, the next signal is dependent on the triangle resolution. A break above 15 would be bullish, while a break below 14.2 would be bearish. The market is likely to follow in the direction of this triangle break.
Click this chart for details.
On the price chart, XLF formed a triangle consolidation over the last eight weeks. Prior to this triangle, the ETF advanced from July to October. While this triangle can be considered a consolidation within an uptrend, the next signal is dependent on the triangle resolution. A break above 15 would be bullish, while a break below 14.2 would be bearish. The market is likely to follow in the direction of this triangle break.
