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Jan 7th, 2010: What’s going on with Financial Stocks?

Posted by pugsma on January 7, 2010

Update (8:15pm):  Sure looks like XLF is breaking out and the alternate count in purple maybe correct.   Wave [5] could run up to 16.77 to 17.87 in a few weeks to a month.  Chart updated for EOD levels.

There has been quite a tremdenous rotation into Financial Stocks since Dec 17, 2009.  This sector has been out of favor since the October 2009 highs.  But recently it’s been climbing and helping to push the SP-500 to new highs.

 Below I take a quick look at the daily chart on the XLF for some clues into what might be happening.  If looks like XLF may be in wave [4] ascending triangle and is completing the d-leg up here around 15.30.  A retrace of the e-leg could go back down to about 14.30, before the Wave [5] run to new highs around 17.75 to 18.50 later in 2010.  This 15.25 to 15.30 area is a key level to watch.  If it continues to break higher and takes out the Wave [3] top of 15.76, then the alternate count is purple maybe in play.

XLF Daily Chart (1-7-10):

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