Financial sector exchange traded funds got a lift Monday from the rally in bank stocks as Citigroup (NYSE: C) led the way, gaining over 6%. However, one technical analyst says the sector’s outlook remains bleak and recommends shorting the financial ETF.
Financial Select Sector SPDR (NYSEArca: XLF) was up nearly 3% in afternoon trading Monday following a miserable Thanksgiving week. Hopes that European leaders are working toward a solution to the debt crisis and reports of solid Black Friday retail sales in the U.S. helped boost sentiment.
“Equities are rallying from oversold today following seven consecutive down sessions. The downtrend off the October high still remains and we expect a reassertion lower once the bounce has exhausted itself,” said Tarquin Coe at Investors Intelligence.
“Financials are popping hard and that is an opportunity to sell. Financial Select Sector SPDR remains in a clear falling trend channel off the October high. The sector itself has been an underperformer since mid-2009 and the story has not changed over the weekend,” he wrote in a newsletter on Monday.