The Financial Select Sector ETF (XLF) May Be In A Possible Basing Pattern
I often talk about the advantages of trading ETFs versus individual stocks. A widely traded ETF from the financial sector is the Financial Select Sector SPDR ETF (NYSE:XLF), which trades on the New York Stock Exchange with an average daily volume of about 150 million shares. The majority of it’s holdings are large-cap financial services companies based in the US.
Here’s a breakdown of XLF’s top 10 holdings:
Data as of 2010-06-03
The Euro’s Demise Has Been Set in Motion: Are you protected?
"Nationalism will emerge. Healthier countries will not see fit to spend their hard earned money to bail out their less responsible neighbors."
CLICK HERE to get your Free E-Book, “Why It’s Curtains for the Euro”
XLF Top Ten Holdings
- Bank of America Corporation (NYSE:BAC): 10.12%
- Wells Fargo Company (NYSE:WFC): 9.70%
- J.P. Morgan Chase & Co. (NYSE:JPM): 9.57%
- Berkshire Hathaway Inc. Class B (NYSE:BRK.B): 7.21%
- Citigroup, Inc. (NYSE:C): 4.86%
- Goldman Sachs Group, Inc. (NYSE:GS): 4.32%
- American Express Company (NYSE:AXP): 3.12%
- US Bancorp (NYSE:USB): 2.90%
- Morgan Stanley (NYSE:MS): 2.39%
- Bank of New York Mellon Corporation (BK): 2.13%
% Assets In Top 10: 56.31%
Total Holdings: 80
Financial Select Sector SPDR (NYSE:XLF) Daily Chart
This ETF has been going through what looks like a possible basing pattern over the past couple of weeks. The next move looks like a possible re-test of the 200-day moving average which has held it down a number of times recently. One difference about this next possible attempt is the fact that XLF will have cleared it’s 20-day moving average. Volume has been lacking and the upside until the 200-DMA is about $0.50. It doesn’t look like a buy to me until a close above the 200-day with volume. The components look decent relative to the ETF, with Goldman Sachs (GS) dragging behind as an exception.
The financials are also the most exposed to any news out of Europe and other crises that are on the horizon. There is considerable headline risk involved with this sector and while it’s not as bad as owning BP Plc. (BP) stock, it’s definitely one that I would trade cautiously.
Technical analysis gives you an edge in uncertain times like these. I recommend this free trading course for easy to use technical analysis tips and tricks: Free Trading Course Signup Page
If you want me to look at other sector ETFs and their components, leave a comment below or tweet me @Market_Space with your symbols.
Most Comments