The XLF ETF represents the Financial Select Sector Index which includes companies from commercial banks, diversified financial services, insurance, capital markets, REITs, consumer finance, mortgage finance and real-estate management and development. It is as you can see not just commercial banks. This can at times, create more volatility than many investors expect. For that reason it is often an interesting ETF to trade in.
XLF ETF Chart To June 17 2016
The last time I reviewed the XLF ETF, it was trading around $23.77 on April 27. Since then the ETF has fallen 5% to close on Friday at $22.61.
Financials have fallen out of vogue once again, since the Federal Reserve has put another interest rate increase on the “back-burner”. Many financial institutions rely on higher interest rates to generate better profits. With interest rates not rising, many investors are worried that financial stocks will do poorly and they have been unloading them.
XLF ETF to June 17 2016
However, as you can see in the chart above, despite analysts advising investors that “financial sector” stocks are a “screaming buy” right now, as a group, they were considerably lower in February when the XLF ETF reached an intraday low of $19.53.
XLF ETF – 13% Lower Still
This is 13.6% lower than Friday’s close, so never believe that the financial sector can’t go lower. It may be a screaming buy as analysts have indicated, but it was a better buy in February and if the Brexit votes ends with a “leave” decision, the financial sector will fall further in my opinion.
XLF ETF Returns 20% to June 2016
Since the start of 2016 I have continued to trade the XLF ETF but I remain cautious in my positions. The last trade in the XLF was back on June 3. To date the XLF has returned 20%. With 6 months still left in the year, there is a good chance for at least a 30% gain if not 40% by the end of the year!
XLF ETF Trades for 2016 Update
FullyInformed Members can review all trades done to date in the XLF ETF for 2016 directly through this link or they can sign in to the full members site here. Non-members can join here or read about the benefits of being a member.
Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.
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