As The Market Pushes Higher, This Sector Could Be Ready To Follow
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ETF Watchlist
Wednesday seems to be the day those in the market have been looking for, where the market finally had the strength to break out of the funk it had been in for the last several sessions. Tech names led the way, as per usual, but there was heavier participation across the board from sectors like financial and even energy which had also been taking its lumps.
Now, with the debt ceiling debate seemingly making some headway in getting figured out, there is one less thing for the market to be uncertain about. This has led investors to invest more into the idea that there is a bull market, or at least rally, in effect, albeit a slow grinding one.
The best spots to look if that is the case could be places other the tech sector, although that sector has proven to be a very active participant in this rally. These areas are the ones that have somewhat lagged this overall move higher, sectors like financials, energy, or even industrials.
For this issue of our ETF spotlight, we want to keep our focus on financials. This sector is not only in a significant recovery mode from the shake up various bank failures, but should also, down the road, benefit from the continued rise in rates, as much of this sector is made up by the big banks.
Financial Select Sector SPDR ETF (XLF)
Looking at the one month chart on the XLF we can see it is still in a bit of a consolidation pattern, not moving significantly higher, but not lower either. This could mean this area of the market is lagging the rest, should this rally really have the legs to continue.
In this case, it may be worth adding it to your watchlist for a possible breakout candidate. Much like the market broke out of its consolidation pattern to the upside, this sector could as well.
Be sure to keep this sector on watch as we look for some undervalued pockets in a market that looks rearing to go higher.
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