XLF, Ready to Bounce Back?

Published on Sunday, 23 May 2010 22:29 Written by Danny Miller

New York, May 23^rd (TradersHuddle.com) – The Financial Select Sector Spider (NYSE:XLF) jumped 3.55% to $14.75 on Friday’s trading session, as the sector was able to attract a strong bid.

The push higher helped the overall market as risk appetite returned and shorts moved to cover their positions on speculation the financial overhaul bill that was just passed by the Senate on Thursday will not be as onerous to the bottom line of financial institutions as first feared.

The financial sector ETF is down 13% from its peak this year on April 14th. The financial sector has been hit hard on financial regulation and European sovereign debt concern.  With Friday’s move the ETF is now 2% positive for the year.

The financial ETF is still trading below its 200 day moving average, which will act as strong resistance, however momentum from short covering and from investors returning to the sector as the uncertainty from Washington’s involvement lifts off, will likely provide enough push for the XLF to push above resistance.