$$ Weekly Financials Report

Jan 11-15, 2010
For the annotated chart of $XLF, please go here.

XLF

Price closed up $0.82 for the week at $15.22, the highest close since October. Price is just 40 cents shy of the outer Keltner Channel (50,4,25) and well above the main trend line on price (~$14.05).

Momentum: RSI made a 4 month momentum peak at 68 last week. In so doing, RSI finally broke through an old bearish divergence line which was serving as resistance. When it did, price accelerated upwards 5% last week. In addition, RSI broke through the 62 level which is the ceiling for downtrends, thereby confirming the up trend after 2 months of consolidation.

Volume increased this week as evidenced by the skyrocketing short term accumulation average.

Volatility: XLF spent most of December in a squeeze pattern, with Std Deviation below its long term Bollinger Band (125,1.5) and ADX hovering below 20. Price broke out on December 21, traded sideways through the holiday, and spiked up last week. Std Deviation and ADX are now starting to rise which could easily power a nice rally.

Next Week's Outlook: XLF seems to have broken out of its consolidation pattern powered by increased volatility, strong accumulation, and trend acceleration after breaking old bear divergence resistance in the RSI. I expect XLF to exceed its outer Keltner Channel soon. If it does, look to take profits when new bearish divergence develops between price and momentum.