Depicted on the three Daily charts below are a ratio
comparison of the Financials ETF to a Major Index in the U.S.,
European, and Chinese equity markets. They show how the ETF has advanced
compared to the Index. In all three cases, the Financials have outperformed the
Index.
The U.S. XLF:$SPX ratio chart shows that the
Financials ETF is up against formidable resistance and the RSI is nearing
overbought territory. The rising 50 sma is still holding just above the rising
200 sma. Any breakout above the last swing high would likely be met with more
resistance until the RSI reverts back to, at least, the 50 level. We may,
however, see another attempt to make a higher swing high first. Under such a
scenario, I'd look for a negative RSI divergence to signal that a pullback may
be around the corner, which could then send the RSI back to 50, or
lower.
