XLF- Double Top? or Breakout? SPY in Trouble?
Well, isn't this interesting? After 12 years the XLF has finally managed to get back up to the old highs set back in 2007!
Double top is exactly the same (to the penny) as 2007, as shown, just before the financial crisis for 2007-2009 happened.
If we look at history the XLF began to crack and break down in 2007, giving us clues about the rest of the stock market a few months
before the market began to collapse.
The XLF diverged and led the market index down before other traders began to recognize that the market index was in jeopardy.
So now the question is, will it happen again?
More importantly is this a double top in the XLF and do we begin to set up a major market correction?
Or- Will the XLF break through the resistance overhead at the high and still continue up?
How likely is the XLF double top high to get broken next week?
Well, very seldom does any chart show a breakout on the first try after touching the exact resistance line of a former high.
We would expect a pullback very soon, if not immediately next week. Most breakout charts ,at a minimum, would pullback for a while
and gather more energy by consolidating at lower levels before attempting a breakout (if that is in store).
Think about a cup and handle pattern.
Otherwise, if the double top is in play, we could see a huge sell off down to the green zones below as shown.
Forecast is lower for the XLF going forward, with both bullish and bearish patterns... down to gather energy at a lower level for a future breakout in the bullish scenario,
or a complete failure and falling back down to the green buy zones way below... either way, both ideas point down!
Double top is exactly the same (to the penny) as 2007, as shown, just before the financial crisis for 2007-2009 happened.
If we look at history the XLF began to crack and break down in 2007, giving us clues about the rest of the stock market a few months
before the market began to collapse.
The XLF diverged and led the market index down before other traders began to recognize that the market index was in jeopardy.
So now the question is, will it happen again?
More importantly is this a double top in the XLF and do we begin to set up a major market correction?
Or- Will the XLF break through the resistance overhead at the high and still continue up?
How likely is the XLF double top high to get broken next week?
Well, very seldom does any chart show a breakout on the first try after touching the exact resistance line of a former high.
We would expect a pullback very soon, if not immediately next week. Most breakout charts ,at a minimum, would pullback for a while
and gather more energy by consolidating at lower levels before attempting a breakout (if that is in store).
Think about a cup and handle pattern.
Otherwise, if the double top is in play, we could see a huge sell off down to the green zones below as shown.
Forecast is lower for the XLF going forward, with both bullish and bearish patterns... down to gather energy at a lower level for a future breakout in the bullish scenario,
or a complete failure and falling back down to the green buy zones way below... either way, both ideas point down!