The Financials SPDR (XLF) broke its intermediate-term TREND line of support yesterday. The last time this happened was on May 9 of this year and back on April 13, 2011. Following those two breaks, the XLF posted sizable declines over the ensuing intermediate term. Thus, we believe breaking the TREND line of support indicates that a sell off is near; financials have been slowly trading lower and lower since the election on November 6. Keep in mind we’ve stated before that an Obama win would be negative on the sector.
Between the aforementioned quantitative view, Obama’s reelection and the ongoing Fiscal Cliff debacle, it’s looking decidedly bleak for financials over the next few months.
