Banks took it on the chin yesterday with Silicon Valley Bank the latest to alarm investors.

XLF itself has shed over 10% in the past month.

We’ll take a fresh look at the financial sector.

continued for members…

First, the overall picture:

The SMA200s – all of them – will continue to be quite important.

XLF tested its 2007 highs twice before finally pushing through in Feb 2021.  It reached the top of the red channel before returning to backtest the 2007 highs multiple times.

It’s pretty clear that holding 30.98 and the red channel midline is critical for the bulls.

Fortunately for the bulls, the red .618 is also coming into play – extra support. If it can hold, then we should see a bounce into the April cycle high – say 36ish.

Given the stress now seen in the bank sector, the odds of a 50 bps Fed hike will likely drop quite a bit – giving XLF a little extra help.

If it can’t hold, of course, the next support doesn’t come until 26.74.

Stay tuned.