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The SPDR Financial Sector ETF (AMEX: XLF) looks to have bottomed, and is headed for a test of its intermediate term trend.
Chart Courtesy of StockCharts.com
Bank stocks have turned in a decent performance of late, with several companies having beaten earnings expectations and pointing to better times ahead than most analysts expected.
This is not all that surprising, given the amount of hype that has been circulating in the system for the past few months. To be sure, the subprime mortgage crisis is not something to ignore, but it has been in place for a while now, and some banks seem to have had an opportunity to at least partially clean up their books.
The real question for investors, though, is whether the worst has been seen for enough of the big banks, or if what we've seen this quarter is just a lull in a bad trend that's just looking to reassert itself.
From a charting standpoint, the first real test for XLF is somewhere around 23, the 50-day moving average, where losts of folks that bought on the way down might decide to get out while the getting seems to be good.
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