Monday, November 7, 2011

XLF Comparative Study

As mentioned in my brief note on Friday (see Here), I am watching the XLF very closely here and contrasting it with the rebound highs that occurred in October 2007. Since the low in early October, the equity markets have traded along similar paths after exhibiting like extremes in indicators such as the New-High New-Low Index (see Here). Below is an hourly comparison of the two time frames. 

As someone who believes the equity markets are setting another trap for the bulls, I would like to see the market exhibit stubborn strength - perhaps meeting or slightly eclipsing the highs from October 27th in the face of deteriorating breadth. 
* This chart was created before the open this morning.