Financial Select Sector SPDR Comparison to SPDR S&P 500 ETF

The current structure of the Financial Select Sector SPDR ETF bears a similar resemblance to the SPDR S&P 500 ETF price chart in a different time frame.

If you look at the 1998 time period for the SPY you can see that it had a similar ‘domed house’ top and then a sideways rectangle formation quite similar to the sideways rectangle formation in the XLF.  The current rectangle in the XLF is obviously much longer and in fact the overall pattern before that is much longer as well.

The point is that if we are about to break down through support then we are likely to see a quick slice through the bottom support of the rectangle and a CLOSE under the rectangle formation.  Then perhaps a rally back up the bottom of the rectangle and then an all out plunge or crash after that.

I gotta tell you… I have talked about these Astro Aspects a lot during the past few months, and right now we are sitting right dead center in the middle of one of the most negative ones (August 10th to August 12th) and so when I look at the two comparison charts below it is making me think that we could bust through the bottom of the rectangle and get a similar measured move just as was the case in 1998.  It appears as though the extremely negative Astro aspects are working now.  The mainstream media said the decline was due to bad trade deficit numbers and could not seem to explain the decline.

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We have a lot of sideways cause in the market right now which has built up a lot of energy for a big move.  The key in the next few days will be to see what support the market shows if any. 

Look at the 1998 portion of the chart above and you can see how clearly the market showed its conviction to break down through the bottom of the rectangle formation and lead to a mini stock market crash.  The duration of the move was roughly equal to the move that preceded the rectangle formation.

So we seem to have similar dynamics right now.

As of this writing I noticed that the market is down quite heavily afterhours as well.  ‘They’ may be ready to let the market fall for real this time…

Posted in ETFS, Technical Analysis
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