Every major market decline includes financial stocks melting down. I do not know if this is a threat or a reality. But the charts have me on guard with regard to this key market sector. After all, if the financial system is in disrepair, it is like a car with a faulty engine. Let’s take a look under the hood of S&P 500 Financials Sector SPDR (XLF), the biggest exchange-traded fund (ETF) devoted to stocks in the U.S. financial sector.
The technical chart is vulnerable at best and on the verge of collapse at worst. That PPO indicator at the bottom is akin to grasping at straws, and getting few in the hand each time. The save here could be the $50 to $51 level, as that has been bounce territory multiple times before. XLF is a good example of how technical analysis is often less of a buy-sell system, and more a warning-alert system. Each investor does their own thing with that information.
