Score 7.6 (out of 10): FINANCIAL SELECT SECTOR SPDR ETF sets up for +4% rally in 2 months

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What’s Going On Here?

While the US yield curve has flattened, interest rates overall have been rising. The US 10 year bond yield has touched 2.40%. This should support US financials / banks.

Why Now?

FINANCIAL SELECT SECTOR SPDR has reached a new shorter-term high. Previously, during similar occasions, FINANCIAL SELECT SECTOR SPDR shares had a median return of +4%, over the following 2 months – based on 10 historical occasions with 8 of those showing positive returns (80% hit ratio). This buy signal for FINANCIAL SELECT SECTOR SPDR received a high score of 7.6 (out of 10). This insight was generated on 2022-March-22 with last price of 39.44.

What’s This Company About?

FINANCIAL SELECT SECTOR SPDR is in the Financial Services business. Based on the last 2 years’ risk/return profile, this asset is seen as Less Risky. Ticker symbol: XLF US.

What’s My Risk / Reward and Time Horizon?

We found 2 months to be the optimal trade horizon, after testing a number of possible alternatives (accuracy of previous returns). Otherwise consider closing out this trade once the target level of 41.01 (+4%) has been reached. Based on FINANCIAL SELECT SECTOR SPDR’s recent up and down swings, LongShortBets suggests considering to set a stop loss level for this insight at 38.14 (last price at 39.44), which is equivalent to a -3.3% decline.

Returns during similar periods:

The chart above shows the previous returns (in %) based on similar setups with the most recent ‘insight’ shown under (1), the second most recent ‘insight’ under (2), etc.

Previous episodes:

-5.8% (January-2022), 0.7% (October-2021), 4% (August-2021), 4% (April-2021), 11.5% (February-2021), 13.9% (October-2020), -1.6% (July-2020), 7.7% (April-2020), 2.2% (December-2019), 7.9% (September-2019).

Historical Chart:

Summary:

NameFINANCIAL SELECT SECTOR SPDR
ViewUp
Star (1 to 10)7.6
Target+4%
Time2 months
Hit Rate80%

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