Saturday, February 16, 2008

Financial Sector Analysis for 02.16.2008


Monthly chart shows 5 waves up into current high made in May 2007. The high was made with regular divergence in the CCI momentum indicator. The index has now retraced more than the .618 fib of the whole move up from the October 2002 low. It is also well below the prior high and key LIS of 30.66 ("old resistance becomes new support" did not materialize). The current month continues to show selling pressure. No buy signal/pattern evident on this timeframe.

Weekly chart shows early buyers stepping back into financial stocks after the January 22nd drop. However, the early bulls were soon met with the bears eager to sell right at the .382 fib resistance level. Can the bulls hold the support at the small .618 fib level and take the financial stocks higher? Or will the bulls and the bears trace out a consolidation pattern before heading lower? The bulls need to clear the current resistance in order to continue higher.

Daily chart shows that Friday's trading action resulted in a narrow range, indicating hesitation between the bulls and the bears. The last move up off the January 22 low was made with 5 waves. The last move down found support off the .618 fib area. This is either wave 2 or wave b. If the bulls can hold this support level, THEN look for at least a test of the current resistance high.

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