Are Financials Starting To Roll Over?

The chart above shows the action in the Financials ETF (XLF). Today, this fund broke below recent support. I know that one day does not make a trend, but if there is any follow through to this move, it could be an early warning sign not just for the financials, but for the overall market as well.

The Nasdaq bucked the weakness again today, with the NDX closing in positive territory. Small and mid-cap indexes were also positive. But financials have a way of pulling everything else down, just like they did in March and again in June-July. So this bears watching-- closely.

Energy stocks were the big winner on the day, with many stocks bouncing +5-10%. Unfortunately, they are still well, well below their highs, and still below more resistance levels. I will be looking to use further strength to lighten up my exposure to energy/commodities/ag.

There is no, new clear-cut leadership that I can identify right now. As such, my game plan is to remain a bit defensive, raise some cash on up days, and implement some hedges in the event of a pullback into the September/October timeframe.

long SKF