As the byproduct of mystical companies with make-believe accounting, the XLF is rarely worth charting.  But, it’s been a few months, and we’ve had some interesting things happen.  When we last posted on Jun 30 [see: Update on XLF], with XLF at 24.38, I forecast three key price levels: 23.88, 25.82 and 22.01.   Noting that XLF had just broken down (again) through a key trend line, I wrote:

Will it bounce right back as though nothing happened, or will this plunge leave a mark?

As it turned out, XLF came within 0.24 of the 23.88 target, bounced right back through the previously-mentioned trend line to within .20 of the 25.82 target, and, finally, opened within .18 of the 22.01 target (on the day that it dropped over 21% in the opening hour — further evidence that XLF is a silly thing to chart.)

continued for members…If we slap a Fib grid on there, we can see that the Aug 24 plunge to 18.52 slightly overshot the 1.618 extension of the rise from last October.  A better reversal would have been 19.03, or 18.21-18.29.If there’s another leg down coming, which seems at least 50:50 at present, then 18.21 makes plenty of sense.  If the drop is more controlled than that, look for the purple 1.618 at 21.08 around Oct 25.

If the downside is done, then there’s a gaggle of dropping SMAs coming up at 24-24.50.  If XLF can push through, then breaking the white .236 at 24.66 would take care of the falling white channel and provide an opportunity to go up and tag the red target at 25.82.