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Financial ETF Poised For Upside Thrust

Published 06/19/2017, 02:24 PM
Updated 07/09/2023, 06:31 AM

The multi-month decline in 10-Year yield — a flattening yield curve — has not negatively impacted the Financial Select Sector SPDR Fund (NYSE:XLF) in quite the perverse way most analysts had expected.

In fact, XLF has cobbled together an impressive accumulation formation during the March-June deterioration of longer-term yield.

The big question is whether or not the relative strength of the Financial's (XLK) is anticipating reasons for longer-term yield to pivot to the upside, thereby supporting stronger earnings and net-interest margins in the banking sector.

My work indicates that yield is nearing a significant multi-month corrective turn in the 2.10% area, ahead of the upside continuation of the July 2016 to Dec. 2016 advance from 1.32% to 2.64%.

10-Yr. U.S. Treasury Yield (top), Financial Select Sector SPDR ETF

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