Will The Hits Keep Coming For This Already Battered Sector?
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After the release of the most recent CPI data, the market looked as though it wanted to break out of the range it had been in for quite sometime. However, once the market opened, traders were quickly treated to the same old market shenanigans with a quick selloff to reverse the gains. Then, as one would expect in this kind of market, the market found somewhat of a bounce only to surge back up toward the premarket highs before quickly reversing those as well in the premarket hours of Thursday’s session.
All this back and forth makes for some pretty frustrating trading, but it is still our job as traders to figure out where the highest probability trade is. We should look for that trade in the weakest area of a market that isn’t showing much signs of strength. That area may still be financials.
Financial Select Sector SPDR ETF (XLF)
For that, we will look at the XLF, which has still been having a rough go at it since the ongoing backing collapses that some experts warn aren’t over yet. This sector has relative weakness in a market that isn’t giving us much more than constant back and forth, or congestion at the very best.
Now, in the long run this sector could be ripe for the plucking and a good add to your long-term portfolio. However, for the average trader, this could be a higher probability trade given market and even sector sentiment. My students and I will continue to keep this sector on watch should the bottom decide to give out once again.
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