Update on XLF: Dec 5, 2014

It’s been a while since we looked at XLF — partly because it’s one of the most frustrating examples of central bank planning obliterating chart patterns and harmonics which are normally highly predictive.  I suppose it’s to be expected, as no sector has benefited from the Fed’s largesse as much as financials.

At the end of 2013, when the purple rising wedge and two different Fib levels indicated a significant reversal, XLF did just that.  It coincided with SPX’s dip back below the significant 1823.

2014-12-05-XLF daily 0800But, like SPX, it was rescued by the Fed, ECB and BOJ and was suddenly back in the rising wedge and seeking higher highs on the back of a new TL, shown above in red.

It lost that TL, too, in the August 2014 mini-correction.  Wouldn’t you know, it popped back above, only to really melt down in the Sep-Oct near-correction of -9.75%.

For those who don’t live and breathe chart patterns, losing a trend line is supposed to be a big deal.  It’s not normally as easy as the past year has made it seem.  But, then, nothing about the bubble-blowing central bank reinflation of “markets” is terribly normal.

2014-12-05-XLF weekly 0800Now, safely back above the red TL, XLF is approaching several Fib levels that would, in an unrigged market, matter.  I point them out in the off chance that TPTB let a little air out after the end of the year, and because it gives bulls something to target as they BTFD.

The most important is theoretically the white .618 at 25.82, which intersects with the white channel .25 line around year’s end.


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