Wed. Jan 19th, 2022

The Finance SPDR (XLF) is one of the leading sectors and recently erupted due to a wedge correction. There was a small setback this week, but the breakout continues and remains bullish until proven otherwise. Let’s see what it takes to prove otherwise.

First, XLF is on a long-term uptrend and is one of the major sectors. The ETF hit a new high last week and StochClose (125.5) stood at 85.51 (bottom window). This indicator ranges from 0 to 100 and levels above 85 show that the price is close to the maximum six months. TrendInvestorPro uses StochClose to rank its top list of 128 ETFs for yield and XLF is in the first quarter. Also note that seven sectors have StochClose values ​​above 85 and are also in the top quarter (XLK, XLC, XLI, XLF, XLV, XLP, XLU, XLRE). No wonder SPY and capital letters are so strong. You can learn more about this indicator on the TIP Indicator Edge Plugins page.

Turning to the price chart, XLF hit a new high in June and then corrected in July with a falling wedge, a pattern that is typical for a correction within a larger uptrend. XLF erupted in early August to indicate the end of the correction and the resumption of the biggest uptrend. The ETF continued with a new high and then fell this week. The lows of late July and early August (green shading) mark the support and this break is considered bullish as long as they remain.

TrendInvestorPro uses StochClose for ranking momentum, trend signals and trend tracking strategies for ETFs in the all-time list and basic list. There are a series of seven parts for strategies related to this indicator completed with subsequent test results, both inside and outside the sample. Click here to access it immediately.


Arthur Hill

About the author:
Arthur Hill, CMT, is the chief technical strategist at Focusing primarily on US equities and ETFs, his systematic approach to identifying trends, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons i Stock and commodities magazine. In addition to being appointed Chartered Market Technician (CMT), he holds an MBA from Cass Business School at City University of London. Learn more

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