US Financial Sector

It was another terrible week for the stock market. The Dow Jones Industrial Average hit a low of 11038 before recovering to end at 11220.

There was news that US Government are working out plans to help mortgage giants Fannie Mae and Freddie Mac and the plan may come out during the weekend. That news help Fannie Mae to rise 9.66% and Freddie Mac to rise 3.03% during the regular session. However, the aftermarket action suggests that both stocks will be hammered come Monday. Freddie Mac was down 20% aftermarket Fannie Mae was down 21% in aftermarket action.

The financial sector recovered on Friday. The XLF rose 3.62%. The XLF managed to stay above its 50 day moving average for the whole of this week. An incredible feat given that Dow was down 2.7% for the week.

The XLF is now in “Recovery” mode and it has been oscillating between “Bearish” and “Recovery” phase for the past few months. Unless it can overcome the 200 day moving average and moved to “Accumulation” phase, the advantage still goes to the Bears.

US Financial Sector Update

Dow Jones closed at 12479, down 145 points. Not a good sign for the Bulls. For the week, Dow dropped by 507 points. It looks to have formed a double top and is now below its 50 day moving average of 12642.

The weakening of the index is mainly due to high oil prices which is causing inflation worries all over the world. It is also likely that the FED will stop its rate cut measures giving investors less excuse to buy into the market.

The phase chart of the iShares Dow Jones US Financial Sector fund (Symbol: IYF) is back into “Bearish” phase. It stayed in “Recover” mode for 18 trading days but could not gather enough momentum to move to “Accumulation” phase.



Let’s hope the March lows can hold water. If not it will be bad times ahead for the Bulls again.

US Financial Sector Update

US Financial Sector seems to be gaining strength again.

The iShares Dow Jones US Financial Sector fund is now in "Recovery" phase.
This is the first time the fund is testing the "Recovery" phase twice within
a span of 10 trading days since the beginning of 2008.

The fund is now trading slightly above the 50 day moving average of 86.24.
It has stayed in "Recovery" mode for 3 days now. Let's see if it is able to
move up to challenge the 200 day moving average of 99.95.

US Financial Sector

The current weak market is caused by US sub-prime problem. If you look at the financial sector in US, you can see the cracks appearing back in Aug 2007.


If you look at the iShares US Dow Jones Financial Sector Fund (Symbol IYF), the ETF went into "Bearish" mode on 2 Aug 2007.


It then tried to stage a comeback which coincides with FED cutting interest rate. It never went back to "Bullish" phase and was quickly back to "Bearish" phase. So we are already about 7 months into the financial sector downturn.


The ETF is now at "Recovery" phase and hopefully it can move to "Accumulation" phase.


This fund is invested in top financial names in US. Companies like JP Morgan, Citibank, Bank Of America are companies held by the ETF.