Financial Select Sector SPDR (NYSEArca: XLF) surged in May to help power the S&P 500 to new all-time highs but the financial ETF is trailing the market in June as a leader turns laggard.

XLF is worth keeping an eye on because the performance of banking stocks is a helpful indicator of risk appetite in the market.

The financial ETF is still ahead of the S&P 500 year to date despite lagging the index so far in June. XLF is up 15.4% so far this year, compared with a gain of 11.4% for iShares Core S&P 500 ETF (NYSEArca: IVV).

Investors Intelligence technical analyst notes XLF is reversing this month after several attempts to break through $20 a share.

Aside from being a round number, it is also a milestone retracement level of the 2007-2009 bear market. The $19.80 mark for XLF is a 50% retracement of that whole slide, the analyst said.

The top five holdings in the financial sector ETF are Berkshire Hathaway (NYSE: BRK-B), Wells Fargo (NYSE: WFC), JP Morgan (NYSE: JPM), Citigroup (NYSE: C) and Bank of America (NYSE: BAC).

“On a relative basis, versus the S&500, despite staging a rally since the end of 2011, it is still short of its high from 2009. That creates a bearish relative divergence given that the price has already broken way above its 2009 high. So over the long-term, financials are not performing as well as many would make out,” Coe wrote in a newsletter. “The XLF has underperformed since the end of May and we expect that to continue given the vulnerable charts belonging to the fund’s components.”

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.