|
Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) got a gift from the federal government and the action may be benficial to the Financial SPDR ETF (XLF).
Chart Courtesy of StockCharts.com
XLF has taken the brunt of the misery in the financial markets over the last twelve months. The ETF has lost nearly 50% of its value since October 2007.
So a bounce is likely, and it could be a bounce that lasts a while and goes a long way. The problem is that it could fade just as fast.
A first move back could take the ETF back to the 24 area, which could be a 33% improvement from the July 11 close.
Yet, there is likely a whole lot of selling pressure awaiting in that area since that's where the most recent bout of selling started.
The question for traders is whether they play this bounce or leave it alone. To be sure, the ETF should open at a fairly high premium to its Friday close, given the way the market is reacting to the Fannie Mae news.
So the best thing to do for now may be just to watch and see what happens.
Make money whether the market rises or falls. Get Dr. Duarte's All NEW "Trading Futures For Dummies." The Trading Manual for All Seasons. Updated, revised includes new charts, and full chapter on ETF timing.
“Futures And Options For Dummies,” Dr. Duarte’s latest book is now available. The markets are responding to news and geopolitical developments like never before. In this environment, individual investors need to expand their investment horizons. "Futures And Options For Dummies " (John Wiley & Sons) has an excellent section on oil futures as well as the currency markets, while covering and expanding on the successful strategies in Doctor Duarte's other books. Order your copy today.
Doctor Joe Duarte's Market I.Q., offers subscribers a unique blend of intelligence, market commentary and trading strategy. Duarte's daily articles, and news summaries offer recommendations and analysis for ETFs, and individual stocks in the technology, health and biotechnology, and energy sectors. Doctor Duarte is a writer, and an emerging futurist, with a diverse background, and a growing audience. His combined expertise in health care, energy, and the effects of politics and global intelligence on the financial markets offer a unique blend of insight and information to thousands of active investors and political and intelligence aficionados around the world on a daily basis.
He is the author of four books: "Futures And Options For Dummies," "Successful Energy Sector Investing," "Successful Biotech Investing" and co-author of "After-Hours Trading Made Easy."
In early 2001 Dr. Duarte in "Successful Energy Sector Investing," correctly predicted that Venezuela's political problems could lead to an energy crisis in the United States.
In 2003, also Dr. Duarte was among the first to widely publicize the long-term friendship between French President Jacques Chirac and Saddam Hussein.
He has also appeared as a weekly guest on Market Mavens Radio, has logged appearances on KNX radio in Los Angeles, Financial Sense.com radio, and Wall Street Radio.
One of CNBC's original Market Mavens, Dr. Duarte has been writing about the financial markets since 1990.
His articles and commentary have been featured on CBS Marketwatch, Barron's, Smart Money, Medical Economics, and in Technical Analysis of Stocks and Commodities magazines.
In 2003, Doctor Duarte received second place, in the professional section, of the Medical Economics Investment Challenge with a 12-month return of 42%.
|
