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XLF Is Testing Key Technical Support As Bank Stocks Plunge

From Tyler Durden: With bond yields tumbling, and loan markets suggesting banks are not taking advantage of rising rates to earn more NIM (willingness to lend tumbling), financial stocks are falling for the second day in a row to a key technical support level.

Note that the green line (50-day moving average) in the XLF (Financial ETF) chart below has held for 3 weeks:

Taking a close up look, it’s clear the 50-day moving-average has been key support:

Makes you wonder what credit markets know?

Is that $50 differential really pricing in Dodd-Frank easing? And if so, why isn’t credit more excited about the drop in ‘business’ risk?

Leading the XLF lower today are major banking stocks like Wells Fargo (-2%), Bank of America (-1.8%), Citigroup (-1.4%), and JPMorgan Chase (-1.2%). Meanwhile, PNC (-0.20%) and BlackRock (-0.5%) proving relatively immune to the one-day purge.

The Financial Select Sector SPDR Fund (NYSE:XLF) was trading at $23.34 per share on Wednesday morning, down $0.21 (-0.89%). Year-to-date, XLF has gained 0.39%, versus a 2.29% rise in the benchmark S&P 500 index during the same period.

XLF currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 38 ETFs in the Financial Equities ETFs category.

This article is brought to you courtesy of ZeroHedge.

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