{"id":189903,"date":"2023-05-05T10:29:45","date_gmt":"2023-05-05T14:29:45","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=189903"},"modified":"2024-01-24T12:13:49","modified_gmt":"2024-01-24T17:13:49","slug":"chart-advisor-will-markets-follow-financials","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/chart-advisor-will-markets-follow-financials\/","title":{"rendered":"Chart Advisor: Will Markets Follow Financials?"},"content":{"rendered":"\n<p><strong><a href=\"https:\/\/www.investopedia.com\/contributors\/54841\/?utm_source=chart-advisor&amp;utm_campaign=fwd_chartadvisor&amp;utm_term=27774019&amp;utm_medium=email\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>By&nbsp;<\/strong><\/a><strong><a href=\"https:\/\/www.investopedia.com\/contributors\/54841\/?utm_source=chart-advisor&amp;utm_campaign=fwd_chartadvisor&amp;utm_term=27774019&amp;utm_medium=email\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>J.C. Parets<\/strong><\/a>&nbsp;&amp;&nbsp;<a href=\"https:\/\/get.allstarcharts.com\/?utm_source=chart-advisor&amp;utm_campaign=fwd_chartadvisor&amp;utm_term=27774019&amp;utm_medium=email\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>All Star Charts<\/strong><\/a><\/strong><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-thursday-4th-april-2023\">Thursday, 4th April, 2023<\/h2>\n\n\n\n<p><strong>1\/ Financials Flirt With Disaster<\/strong><\/p>\n\n\n\n<p><strong>2\/ Micro Caps Lead the Way Down<\/strong><\/p>\n\n\n\n<p><strong>3\/ Cattle Futures Print New Highs<\/strong><\/p>\n\n\n\n<p><strong>4\/ Gold Challenges Its Former All-Time Highs<\/strong><\/p>\n\n\n\n<p><em>Investopedia is partnering with All Star Charts on this newsletter, which both sells its research to investors, and may trade or hold positions in securities mentioned herein. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-1-financials-flirt-with-disaster\">1\/ <strong>Financials Flirt With Disaster<\/strong><\/h2>\n\n\n\n<p>In yesterday\u2019s note, we discussed the importance of the pre-<a href=\"https:\/\/www.investopedia.com\/articles\/economics\/09\/financial-crisis-review.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9051339-20230504&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=050423\" target=\"_blank\" rel=\"noreferrer noopener\">financial crisis<\/a>&nbsp;highs in the&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/f\/financial_sector.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9051339-20230504&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=050423\" target=\"_blank\" rel=\"noreferrer noopener\">Financial Sector<\/a>&nbsp;SPDR (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=XLF&amp;hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9051339-20230504&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=050423\" target=\"_blank\" rel=\"noreferrer noopener\">XLF<\/a>). This critical level of interest also acted as&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/r\/resistance.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9051339-20230504&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=050423\" target=\"_blank\" rel=\"noreferrer noopener\">resistance<\/a>&nbsp;in 2018 and early 2020. Bulls are hoping it acts as&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/z\/zone-of-support.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9051339-20230504&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=050423\" target=\"_blank\" rel=\"noreferrer noopener\">support<\/a>&nbsp;over the coming days.<\/p>\n\n\n\n<p>While XLF gives us a good look at what the largest and most important financial institutions in the U.S. and the world are doing, due to its&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/c\/capitalizationweightedindex.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9051339-20230504&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=050423\" target=\"_blank\" rel=\"noreferrer noopener\">cap-weighted<\/a>&nbsp;structure, it doesn\u2019t tell us the whole story. For a broader representation of financial stocks\u2019 performance, we tend to use the Invesco&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/e\/equalweight.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9051339-20230504&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=050423\" target=\"_blank\" rel=\"noreferrer noopener\">Equal-Weight<\/a>&nbsp;S&amp;P Financials ETF (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=RYF&amp;hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9051339-20230504&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=050423\" target=\"_blank\" rel=\"noreferrer noopener\">RYF<\/a>):<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/05\/1-4-1100x537.png\" alt=\"\" class=\"wp-image-189926 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/537;\" \/><figcaption class=\"wp-element-caption\"><strong>Source: All Star Charts, with data provided by Optuma<\/strong><\/figcaption><\/figure>\n\n\n\n<p>As you can see in the daily&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/c\/candlestick.asp\" target=\"_blank\" rel=\"noreferrer noopener\">candlestick <\/a><a href=\"https:\/\/www.investopedia.com\/terms\/c\/candlestick.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9051339-20230504&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=050423\" target=\"_blank\" rel=\"noreferrer noopener\">c<\/a><a href=\"https:\/\/www.investopedia.com\/terms\/c\/candlestick.asp\" target=\"_blank\" rel=\"noreferrer noopener\">hart<\/a>&nbsp;above, RYF finds itself at a critical juncture. This ETF slipped to its lowest level in over two years today, despite recapturing about half of its losses throughout the session.<\/p>\n\n\n\n<p>Due to the intraday recovery, RYF was able to close the day above its 2018 highs around 47.50. These former highs were also successfully tested back in March after the first string of bank failures. If bears are able to take control and force a violation of this key support zone, it could warrant a more cautious approach to the overall market. XLF is likely to break down beneath its equivalent level under this scenario.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-2-micro-caps-lead-the-way-down\">2\/ <strong>Micro Caps Lead the Way Down<\/strong><\/h2>\n\n\n\n<p>With U.S. equities under pressure this week, we&#8217;re keeping close watch on the cycle\u2019s culprits for leading evidence of further downside.<\/p>\n\n\n\n<p>The weakest areas of the market are generally the first to break down and lead the rest of the market lower. Here is a chart of the&nbsp;Russell Micro-Cap ETF (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=IWC&amp;hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9051339-20230504&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=050423\" target=\"_blank\" rel=\"noreferrer noopener\">IWC<\/a>), representing one of the weakest areas of the market right now:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/05\/2-4-1100x546.png\" alt=\"\" class=\"wp-image-189928 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/546;\" \/><figcaption class=\"wp-element-caption\"><strong>Source: All Star Charts, with data provided by Optuma<\/strong><\/figcaption><\/figure>\n\n\n\n<p>Price is not only making multi-year lows but is also undercutting its former highs from 2020.<\/p>\n\n\n\n<p>If bears force a downside resolution in&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/m\/microcapstock.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9051339-20230504&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=050423\" target=\"_blank\" rel=\"noreferrer noopener\">micro-cap stocks<\/a>, we could expect a fresh leg lower for this group. Under this scenario, there&#8217;s a high chance that the broader market will also experience heightened selling pressure.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-3-cattle-futures-print-new-highs\">3\/ <strong>Cattle Futures Print New Highs<\/strong><\/h2>\n\n\n\n<p>Some of the strongest areas of the commodity space are running into logical areas of overhead supply. Cattle futures offer a prime example.&nbsp;<\/p>\n\n\n\n<p>Here are live cattle futures printing all-time highs last month off a key extension level:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/05\/3-4-1100x561.png\" alt=\"\" class=\"wp-image-189930 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/561;\" \/><figcaption class=\"wp-element-caption\"><strong>Source: All Star Charts, with data provided by Optuma<\/strong><\/figcaption><\/figure>\n\n\n\n<p>The extension level near 175 could indicate potential resistance. Unsurprisingly, sellers have defended that level by driving prices lower in recent sessions.<\/p>\n\n\n\n<p>While there&#8217;s nothing more bullish than new all-time highs, prices do not move in a straight line.&nbsp;A period of digestion after the recent rally could be a healthy and constructive development for the next leg higher in cattle futures.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-4-gold-challenges-its-former-all-time-highs\">4\/ <strong>Gold Challenges Its Former All-Time Highs<\/strong><\/h2>\n\n\n\n<p>While cattle futures enter a period of&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/c\/consolidation.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9051339-20230504&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=050423\" target=\"_blank\" rel=\"noreferrer noopener\">consolidation<\/a>&nbsp;after an explosive rally, gold could be preparing to break out.&nbsp;<\/p>\n\n\n\n<p>The June contract for gold came within $4 of posting an all-time high today. Notice how price is carving out a two-year base, slowly digesting overhead supply:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/05\/4-4-1100x561.png\" alt=\"\" class=\"wp-image-189932 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/561;\" \/><figcaption class=\"wp-element-caption\"><strong>Source: All Star Charts, with data provided by Optuma<\/strong><\/figcaption><\/figure>\n\n\n\n<p>This is the opposite of what we witnessed in the live cattle futures chart. Cattle futures are potentially reaching the end of an expansion phase, or run-up in price.<\/p>\n\n\n\n<p>On the flip side, gold futures are nearing the<em>&nbsp;<\/em>possible end of a lengthy period of contraction or&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/a\/accumulation.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9051339-20230504&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=050423\" target=\"_blank\" rel=\"noreferrer noopener\">accumulation<\/a>.&nbsp;All eyes are now on gold futures as&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/g\/goldbug.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9051339-20230504&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=050423\" target=\"_blank\" rel=\"noreferrer noopener\">gold bugs<\/a>&nbsp;push toward an upside resolution.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally posted 4th May 2023<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In yesterday\u2019s note, we discussed the importance of the pre-financial crisis\u00a0highs in the\u00a0Financial Sector\u00a0SPDR (XLF). This critical level of interest also acted as\u00a0resistance\u00a0in 2018 and early 2020. Bulls are hoping it acts as\u00a0support\u00a0over the coming days.<\/p>\n","protected":false},"author":186,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21,14,17,18,6,8,9,22,23,26,3],"tags":[12745,6686,2171,2006],"contributors-categories":[13686],"class_list":{"0":"post-189903","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-commodities","7":"category-etfs","8":"category-futures","9":"category-macro","10":"category-north-america","11":"category-region","12":"category-securities","13":"category-stocks","14":"category-technical-analysis","15":"category-text-articles","16":"category-traders-insight","17":"tag-gc_f","18":"tag-iwc","19":"tag-ryf","20":"tag-xlf","21":"contributors-categories-investopedia"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Chart Advisor: Will Markets Follow Financials?<\/title>\n<meta name=\"description\" content=\"In yesterday\u2019s note, we discussed the importance of the pre-financial crisis\u00a0highs in the\u00a0Financial Sector\u00a0SPDR (XLF). 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Bulls are hoping it acts as\u00a0support\u00a0over the coming days.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/chart-advisor-will-markets-follow-financials\/\" \/>\n<meta property=\"og:site_name\" content=\"IBKR Campus US\" \/>\n<meta property=\"article:published_time\" content=\"2023-05-05T14:29:45+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-01-24T17:13:49+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.ibkrcampusdev.wpengine.com\/campus\/wp-content\/uploads\/sites\/2\/2023\/05\/1-4-1100x537.png\" \/>\n<meta name=\"author\" content=\"Contributor Author\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Contributor Author\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\n\t    \"@context\": \"https:\\\/\\\/schema.org\",\n\t    \"@graph\": [\n\t        {\n\t            \"@type\": \"NewsArticle\",\n\t            \"@id\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/traders-insight\\\/securities\\\/macro\\\/chart-advisor-will-markets-follow-financials\\\/#article\",\n\t            \"isPartOf\": {\n\t                \"@id\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/traders-insight\\\/securities\\\/macro\\\/chart-advisor-will-markets-follow-financials\\\/\"\n\t            },\n\t            \"author\": {\n\t                \"name\": \"Contributor Author\",\n\t                \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/#\\\/schema\\\/person\\\/e823e46b42ca381080387e794318a485\"\n\t            },\n\t            \"headline\": \"Chart Advisor: Will Markets Follow Financials?\",\n\t            \"datePublished\": \"2023-05-05T14:29:45+00:00\",\n\t            \"dateModified\": \"2024-01-24T17:13:49+00:00\",\n\t            \"mainEntityOfPage\": {\n\t                \"@id\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/traders-insight\\\/securities\\\/macro\\\/chart-advisor-will-markets-follow-financials\\\/\"\n\t            },\n\t            \"wordCount\": 714,\n\t            \"commentCount\": 0,\n\t            \"publisher\": {\n\t                \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/#organization\"\n\t            },\n\t            \"image\": {\n\t                \"@id\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/traders-insight\\\/securities\\\/macro\\\/chart-advisor-will-markets-follow-financials\\\/#primaryimage\"\n\t            },\n\t            \"thumbnailUrl\": \"https:\\\/\\\/www.ibkrcampusdev.wpengine.com\\\/campus\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2023\\\/05\\\/1-4-1100x537.png\",\n\t            \"keywords\": [\n\t                \"GC_F\",\n\t                \"IWC\",\n\t                \"RYF\",\n\t                \"XLF\"\n\t            ],\n\t            \"articleSection\": [\n\t                \"Commodities\",\n\t                \"ETFs\",\n\t                \"Futures\",\n\t                \"Macro\",\n\t                \"North America\",\n\t                \"Region\",\n\t                \"Securities\",\n\t                \"Stocks\",\n\t                \"Technical Analysis\",\n\t                \"Text Articles\",\n\t                \"Traders' Insight\"\n\t            ],\n\t            \"inLanguage\": \"en-US\",\n\t            \"potentialAction\": [\n\t                {\n\t                    \"@type\": \"CommentAction\",\n\t                    \"name\": \"Comment\",\n\t                    \"target\": [\n\t                        \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/traders-insight\\\/securities\\\/macro\\\/chart-advisor-will-markets-follow-financials\\\/#respond\"\n\t                    ]\n\t                }\n\t            ]\n\t        },\n\t        {\n\t            \"@type\": \"WebPage\",\n\t            \"@id\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/traders-insight\\\/securities\\\/macro\\\/chart-advisor-will-markets-follow-financials\\\/\",\n\t            \"url\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/traders-insight\\\/securities\\\/macro\\\/chart-advisor-will-markets-follow-financials\\\/\",\n\t            \"name\": \"Chart Advisor: Will Markets Follow Financials? 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