Although banks are better capitalized then they were heading into the 2008 credit meltdown, the technical picture for financial ETFs isn’t encouraging.
“Thursday’s announcement that Warren Buffett will invest $5 billion in Bank of America sent the Financial Select Sector SPDR Fund (NYSEArca: XLF) sharply higher on the open,” StockCharts reported. “XLF opened above $13 [a share]and surged above $13.20 in the morning. These gains quickly evaporated as sellers returned. This failure reinforces resistance from the mid August high. Follow through above this level is needed before taking any surge too seriously.”
The financial ETF also remains below its longer-term support level from the past two years. The fund was up 0.4% in afternoon trading Thursday.
Financial Select Sector SPDR Fund
Charts source: StockCharts.com.
Max Chen contributed to this article.