{"id":194947,"date":"2023-08-17T01:40:31","date_gmt":"2023-08-17T05:40:31","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=194947"},"modified":"2024-01-24T12:12:48","modified_gmt":"2024-01-24T17:12:48","slug":"chart-advisor-financials-took-a-hit","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/chart-advisor-financials-took-a-hit\/","title":{"rendered":"Chart Advisor: Financials Took a Hit"},"content":{"rendered":"\n<p>By&nbsp;<a href=\"https:\/\/links.investopedia.com\/u\/click?_t=36ba8fa8372241d58b3bfc06997a4332&amp;_m=f283625f9af54b258cf104cda6626a8e&amp;_e=ybBo2ccToX-sxyqmpxmOlzvR8KP7_y2GImjsIvNcsA4GEX9t604r3NVZ8tj3e_fc4d2yVUdQsnjwVTCaBfXtdv9dSu4MnBqIC69nc8iiRdo8PM0kR8mZtSpWzwuAou6sLav-xjmN-4K9RtZz2gyeiH_rw7irUECV88OMczGx2pRk7MHYg3VRiqm8mmKGyamsFXio-lpEHoBN7LaxSkZSTGLDf4yrDaP7WtztnRuDkBEuZ4T8y1sij5MTb9fRiJ4_TIMaIKFyLvStvKsiyxrZxvVIdyM1e3LLW2Ez7wQKocXfOOQE4szMmhOz63fxsEhd7wRTnjKvCgtpybIO3FkdLPuBttwjdzBQgMNfpAaz8sLjbPoaXJNcvjMymkBpI3l46v2EVCv1PWiS6rwjNA1nfapoPm4nAeqDoR7W6h0o0upBu6QOiEPSqXIfrElUbsgZc3qHTY_ZvnwzN-EFCmqVXg%3D%3D\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>J.C. Parets<\/strong><\/a>&nbsp;&amp;&nbsp;<a href=\"https:\/\/links.investopedia.com\/u\/click?_t=36ba8fa8372241d58b3bfc06997a4332&amp;_m=f283625f9af54b258cf104cda6626a8e&amp;_e=ybBo2ccToX-sxyqmpxmOl1-PQl2LlSlxX5e0Oazi7p4gKFXS-0i_URikfKUR9fy3DOh0E7v6e9TgG69wZzuY82_f7q-Zz1H57gCHdAx3LuU-Y1Gb6w7WKE-fF-9Yk93gZiU9FT_OjxtT07kDAAXr1wo0rjplgGrQ-U0LElyap-qMYunfHpnjndAKD3MbDZMkfkPAS0z4lXy5i6Uk8N7luj8PM5PtTX1KK9L46yMVdRJsfRxD2X_JJqPyqKf0wyk0IXJpwzOwoKgvMSC-BGWUXDZmZK2lzMUQWY50i-y2Aanen1yUGmGUQVGyz9CiW8t7y6DCrdO31rIr2uzSDJlGhwKja6PSvL3m_8ToQSTPzwAMb0wKFZwjAssTDfyz_mGCmoFTBil27tTfwGf1ncigEq7APTTWAYAMegchZ5R-qJvhWxUs5gdmGxYb3jJiCJCo\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>All Star Charts<\/strong><\/a><\/p>\n\n\n\n<p><strong>1\/ Financials Took a Hit<\/strong><\/p>\n\n\n\n<p><strong>2\/ Bond Market Remains Stress-Free<\/strong><\/p>\n\n\n\n<p><strong>3\/ USD\/JPY Resolves Higher<\/strong><\/p>\n\n\n\n<p><strong>4\/ A Dull Month for Bitcoin<\/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-took-a-hit\">1\/ <strong>Financials Took a Hit<\/strong><\/h2>\n\n\n\n<p>Yesterday, the financial sector (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=xlf&amp;hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">XLF<\/a>) had its worst day since May as selling pressure picked up steam.<\/p>\n\n\n\n<p>Fast forward to&nbsp; today, and the bulls are trying to repair some damage by supporting price at the 200-day&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/m\/movingaverage.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">moving average<\/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\/08\/1-21-1100x537.png\" alt=\"\" class=\"wp-image-194948 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/537;\" \/><\/figure>\n\n\n\n<p>As long as XLF remains above this long-term average and the&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/p\/pivotpoint.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">pivot highs<\/a>&nbsp;from Q1 and Q2, we could see investors step in to buy the current dip along with rotation back into&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/v\/valuestock.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">value<\/a>-oriented areas.<\/p>\n\n\n\n<p>However, if buyers do not defend these&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/s\/support.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">support<\/a>&nbsp;zones, there could be further selling pressure in the weeks ahead.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-2-bond-market-remains-stress-free\">2\/ <strong>Bond Market Remains Stress-Free<\/strong><\/h2>\n\n\n\n<p><a href=\"https:\/\/www.investopedia.com\/terms\/c\/creditspread.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">Credit spreads<\/a>&nbsp;remain tight despite the stock market&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/c\/correction.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">correction<\/a>.&nbsp;<\/p>\n\n\n\n<p>Check out the overlay chart of the Russell 2000 ETF (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=iwm&amp;hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">IWM<\/a>) with the High-Yield Bond ETF (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=hyg&amp;hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">HYG<\/a>) and U.S. Treasury ETF (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=iei&amp;hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">IEI<\/a>) ratio:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/08\/2-12-1100x541.png\" alt=\"\" class=\"wp-image-194949 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/541;\" \/><\/figure>\n\n\n\n<p>When markets are under stress, it shows up in credit. A steep decline in the HYG\/IEI ratio would signal an expansion in high-yield credit spreads.<\/p>\n\n\n\n<p>But credit spreads aren\u2019t expanding. Instead, they\u2019re contracting\u2014a clear sign of a healthy market.<\/p>\n\n\n\n<p>As long as the HYG\/IEI ratio continues challenging overhead supply, we could see a mild correction in the underlying&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/u\/uptrend.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">uptrend<\/a>&nbsp;for stocks.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-3-usd-jpy-resolves-higher\">3\/ <strong>USD\/JPY Resolves Higher<\/strong><\/h2>\n\n\n\n<p>USD pairs reach crucial levels while the&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/u\/usdx.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">U.S. Dollar Index<\/a>&nbsp;(<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=dxy&amp;hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">DXY<\/a>) tests a confluence of overhead supply.<\/p>\n\n\n\n<p>It\u2019s a coincidence that sets up critical resolutions in numerous USD pairs.<\/p>\n\n\n\n<p>The&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/forex\/u\/usd-jpy-us-dollar-japanese-yen-currency-pair.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">U.S. dollar vs. Japanese yen (USD\/JPY)<\/a>&nbsp;is at the top of that list, completing a six-week base:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/08\/3-12-1100x561.png\" alt=\"\" class=\"wp-image-194950 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/561;\" \/><\/figure>\n\n\n\n<p>The path of least resistance now leads higher for the dollar-yen as long as it trades above 145.<\/p>\n\n\n\n<p>If the breakout holds and additional USD buy signals materialize, increased selling pressure will likely hit many&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/r\/risk-asset.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">risk assets<\/a>.<\/p>\n\n\n\n<p>For now, it\u2019s still up and to the right for the USD\/JPY\u2014a very similar picture to last year.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-4-a-dull-month-for-bitcoin\">4\/ <strong>A Dull Month for Bitcoin<\/strong><\/h2>\n\n\n\n<p>August has historically been a dull month for&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/b\/bitcoin.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">Bitcoin<\/a>&nbsp;(<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=btcusd&amp;hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">BTC\/USD<\/a>), and we\u2019re seeing that seasonal pattern play out right on cue, as the digital coin has remained unchanged in the past two weeks.<\/p>\n\n\n\n<p>Below is the average cumulative August performance of Bitcoin since 2011.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/08\/4-11-1100x450.png\" alt=\"\" class=\"wp-image-194951 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/450;\" \/><\/figure>\n\n\n\n<p>As you can see, even though the first two weeks tend to be positive, most of August\u2019s weakness starts toward the middle of the month. We\u2019re there now.<\/p>\n\n\n\n<p>This tells us that, if BTC continues to follow its&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/s\/seasonality.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">seasonal pattern<\/a>, it wouldn\u2019t be surprising to see some bearish to&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/s\/sidewaysmarket.asp?hid=52e0514b725a58fa5560211dfc847e5115778175&amp;did=9993643-20230817&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=081723\" target=\"_blank\" rel=\"noreferrer noopener\">sideways action<\/a>&nbsp;throughout the remainder of the month.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally posted 16th August 2023<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Yesterday, the financial sector (XLF) had its worst day since May as selling pressure picked up steam. Fast forward to  today, and the bulls are trying to repair some damage by supporting price at the 200-day moving average.<\/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":[4,14,15,16,18,6,9,22,23,26,3],"tags":[8083,1779,1321,11801,208,11166,2006],"contributors-categories":[13686],"class_list":{"0":"post-194947","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-asia","7":"category-etfs","8":"category-fixed-income","9":"category-forex","10":"category-macro","11":"category-north-america","12":"category-securities","13":"category-stocks","14":"category-technical-analysis","15":"category-text-articles","16":"category-traders-insight","17":"tag-btcusd","18":"tag-dxy","19":"tag-hyg","20":"tag-iei","21":"tag-iwm","22":"tag-usd-jpy","23":"tag-xlf","24":"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 v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Chart Advisor: Financials Took a Hit | Traders&#039; Insight<\/title>\n<meta name=\"description\" content=\"Yesterday, the financial sector (XLF) had its worst day since May as selling pressure picked up steam. 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