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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
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Monday, April 16, 2012

U.S., European, and Chinese Financials

As can be seen on this S&P Sector Summary, the U.S. Financials sector finished in second place today.

The Daily chartgrid below shows these sectors, along with the S&P 500 Index. As can be seen, price is trading around either the 50 sma (red) or the 200 sma (pink).

The graph below shows the gains/losses in these sectors since December 2011. The Financials have performed the strongest, with a gain-to-date of 20.78%.

The Daily chartgrid below contains the YM, ES, NQ, TF, XLF, the major U.S. banks, Visa, and Mastercard. With the exception of Morgan Stanley, they are all trading near their 50 sma...although the TF is a bit weaker than the other 3 e-mini futures indices.

This close-up shot of the XLF shows that price broke below the uptrend line from the December 2011 low, re-tested it and pulled back to rest just above its 50 sma of 15.14...an important support level, along with its 1000 sma (green) at 14.86 and its 5-Year Volume Profile POC of 14.79...ones to watch. A break and hold below those levels could send the S&P 500 Index further below its Daily 50 sma.

The 15 minute chart below of the SPX shows price struggling to recapture last Wednesday's high of 1374.71...a must if price is going bounce and reverse its recent pullback with conviction...also, a must is a break and hold above the Daily 50 sma of 1376.60.

I'd add the following two Daily charts of the European Financials ETF (EUFN) and the Chinese Financials ETF (GXC).

The EUFN has been much weaker of late than the GXC...it's struggling to get back above its 200 sma...a break and hold below 16.00 could confirm intense financial weakness in Europe, as the ECB's LTRO 2 has not had any positive impact yet...in fact, quite the opposite...one to watch!

The GXC is trading in between its 50 and 200 smas...a break out and hold on either side is necessary to re-establish a trend (say above 71.00 and below 66.45).

In summary, the XLF, U.S. banks, Visa, Mastercard, and the SPX are worth watching closely over the next couple of weeks to see if upside leadership can be maintained in order to reverse this recent pullback in the equities market, particularly in view of the upcoming meetings of the IMF and World Bank Group (April 20-22), the G20 (April 20), the Fed (April 24-25), and the G7 (tentatively April 24). Also, the EUFN and GXC may give some clues as to world financial sentiment, which may or may not affect the U.S. markets.