XLF Not Particpating

by Paul Costa

Today SPY and the other indices high new highs for the year and hit the highs from 2011.  While this was occurring the "most important sector" to the entire universe just barely made a new high and closed down today. This is important because since 2007 what the financials do the market does later.  

XLF was not able to get a boost from the Greek bailout news and after hitting a new high by a $.01 around 12:00 XLF started to sell off eventually closing green.  In fact while the market has been trending upwards XLF has remained in a range between 14.46 and 14.86.  On Frida when the market made a new high XLF did not, in fact XLF made its high for the year on 2/9 since then today was the last time the it made a new high meanwhile SPY has made new highs since 2/15.  

XLF is nearing strong resistance from 2011.  XLF and other financials were already selling off before the market sell off in the summer.  Before that sell off though, XLF formed a month long base of support at 14.78, eventually this broke and XLF went lower making it resistance.  Now XLF is hitting this resistance and is having trouble getting above it.  

So far it has failed at 14.86 and 14.87 this tells you there are strong sellers at this level, this price is also the middle of the summer basing level.  Buyers have defended the 14.73 level during this short-term range over the last few days.  So XLF remains deadlock of where it will go.  

Watching XLF will be important, a market that is rallying without financials cannot last too long and if XLF sells off the market will follow.  But if XLF gets above 15 it would an additional catalyst to this market.  

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