The Morning Morsel-The Basel Bounce

OK, I’ve talked about the financials for two years, since I started the blog, but lately I have beaten to death my concept of “banks in the box”. That is the  phrase I use to describe the range that the XLF has been in from early May to present, and all the gyrations in between. It is basically the range between $13.34 on the downside to about $15.09 to the upside. Yesterday the XLF closed exactly at the 200 day moving average….exactly. On 8/2/10 it traded as high as 15.09. but closed at 15.08. A close above that high level would be bullish, but it will need to hold.

This is the place where the XLF blasts off or fails, pretty much the same can be said for the S&P. 1130 is the level of resistance. The rest of the week will be interesting to say the least, as the XLF & S&P fight for higher ground.

Consumer confidence hit a 19 month low in Germany this morning and futures are slightly lower in pre trade. We are looking for the big retail sales number at 8:30 and business inventories are released at 10.

Banks caught a bounce after the Basel meeting yesterday. The band aids were put on the cancer in epic fashion and some think the financials will just be dandy now. The can continues to get kicked down the road for the group and the shorts got squeezed…..for now. God luck today.

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