Last week we published a chart on IAI, Broker-Dealer ETF and if you have been following the move higher it has been one of the reasons the financial sector (NYSEARCA:IYF) is now at the top of the trading range. Which from my view is worth watching as well. The ETF closed at $54.57 at the high for the trading range. The follow through and break higher needs to come with some conviction (volume) and the banking sector moving higher as well.
KBE, SPDR Bank ETF, needs to take the lead. Looking at this chart shows a similar situation to IYF, it is trading near the top of the trading range. A move of above $24.40 would be positive for both ETFs. Just to confuse the matter we posted a couple of weeks ago the insurance ETF on the ETF Spotlight as a leader within the sector. Last week KIE, SPDR Insurance ETF broke above resistance at the top the trading range and hit a new high. It is the leader in the sector currently.
As you can see tracking sectors and building strategies for capturing the developing moves is the key to building solid portfolios. IYF, iShares Financial ETF is the last piece of the puzzle for this sector. Watch for a break from the trading range and financial stocks to produce the needed leadership for the broader S&P 500 index to break to a new high. Building portfolios through sectors is a process and the process leads you logically to a definitive conclusion for your portfolio holdings.
As with any investment determine first the strategy. Then measure the risk of the opportunity and then define your entry, exit/stop and target. Stay focused on your goals and manage the risk of the market relative to your portfolio.
Disclosure: Looking for move above $24.40 for IYF