Financials Revisit a Long-Term Level

AMEX:XLF   SPDR Select Sector Fund - Financial
The past week’s selloff in banks has inflicted some punishment on the broader financial sector. But how severe is it? Will the crisis become an opportunity for patient buyers?

Today’s chart of the SPDR Financial Select Sector Fund might help answer those questions. It uses weekly candles to help provide a long-term perspective.

The main pattern with potential relevance is the price area around $31. It was the high on two notable occasions: before the financial crisis in 2007 and immediately before the pandemic in February 2020.

Notice how XLF tested and held this critical level in June and July of 2022. The index briefly fell about $1 below it in October but recovered after a few weeks. Those previous bounces may suggest that old resistance has become new support.

Fast forward to March 2023 and XLF is back in the same neighborhood. This morning saw a probe as low as $30.90 before prices rebounded.

Given that the current low is slightly above the October trough, the result could be an inverted head and shoulders basing pattern. (See the white arrows.)

The 200-week simple moving average (SMA) is the other potentially noteworthy pattern. Notice how XLF bounced at this line at other moments in 2016 and 2018. (See the green arrows.)

Standardized Performances for ETF mentioned above:
Financial Select Sector SPDR® Fund ( XLF ):
1-year: -7.27%
5-years: +23.73%
10-years: +150.14%
(As of February 28, 2023)

Performance data shown reflects past performance and is no guarantee of future performance. The information provided is not meant to predict or project the performance of a specific investment or investment strategy and current performance may be lower or higher than the performance data shown. Accordingly, this information should not be relied upon when making an investment decision.

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