Main | Stock for the Long Term? »

Has the Stock Market Bottomed?

As I mentioned in my article "Major Test for the XLF ETF", the fate of the financial sector would in large part determine whether the market had bottomed. Why? Read my entry on the financial sector exposure of the S&P 500 index. Look at the chart for the XLF financial sector ETF through April 16th:

xlf4182008.png 

There a several things to note from the chart:

  1. There is a significant amount of buying interest (demand) at the $24 price level
  2. When XLF fell below $24 the week of March 17th (red arrow), there was enormous buying interest:
    1. XLF began the week at $22.11 which was also the low for the week
    2. XLF finished the week at $26.32, a 19% increase from the open of $22.11
  3.  As long as the $24 and $22 levels hold, XLF and the market will probably go up from here
    1. The area between $24 and $22 are objective price (demand) levels created by the market; if prices fall below these levels then demand has dried up
    2. If demand dries up, means price must move lower to attract new demand

 

Posted on Wednesday, April 16, 2008 at 01:43PM by Registered CommenterMichael in | CommentsPost a Comment

Reader Comments

There are no comments for this journal entry. To create a new comment, use the form below.

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
Post:
 
All HTML will be escaped. Hyperlinks will be created for URLs automatically.