Financial ETFs Pull Back, But What’s the Next Step?

For those investors who rely on the 200-day moving average as a guide for where and when to invest, financial exchange traded funds (ETFs) could be sending a sell signal. Is the sector primed for a pullback?

The moving average (MA) is a significant indicator that investors follow to read signals that funds and stocks may be sending about the state of the market. When you boil it down to the basics, the MA is basically a trend indicator. As long as indexes stay above the MA, the trend is up. Once they drop below, the trend may have shifted, reports Simon Maierhofer for ETF Guide. (How to follow trends).

Maierhofer points out that financial stocks hit a high on Oct. 14, and since then it’s pretty much been downhill.  (Are financial ETFs facing a losing battle?) Many of the financial ETFs have failed to move beyond the 200-day moving average, and some are below their 50-day moving average. Is this downtrend going to stick around for awhile, or is this just a temporary blip? Only time will tell. (Are banks also an indicator of what’s to come?)

For more stories about financials, visit our financial ETF category.

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