About a month ago, we highlighted a bearish divergence in the semiconductor ETF (SMH) that indicated a potential rotation away from this growth-oriented group into more value plays. That rotation played out fairly well, as the SMH has indeed pulled back and broken its swing low from February. Now we are detecting a similar bearish pattern in the Financial Sector ETF (XLF) as well as many of the big financial names and regional banks.
In today’s video, we’ll review how a bearish momentum divergence signals a potential trend exhaustion, and how to validate and confirm these signals using traditional support and resistance levels.
· How the current chart of many financial names mirrors the recent bearish pattern in semiconductors
· How a potential selloff in financial stocks relates to the incredible rise in interest rates over the last six months
· Why the short-term tactical call and long-term market trend may diverge here, and how to think about a pullback in financial stocks
For deeper dives into market awareness, investor psychology and routines, check out my YouTube channel!
RR#6,
Dave
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. Please see the Disclaimer page for full details.