Best Financial Markets Analysis Article This week¹s surge in financials in general and the TARP banks in particular ran the Financial Select Sector ETF (XLF) from last Friday¹s close at 130.01 to Thursday¹s high at 14.35, or 10.3%. However, as powerful as the upmove might have been, and still is, it may not be more powerful than the two-year down trendline that cuts across the price axis currently in the vicinity of 14.30.

This is a classic case of a strong near-term upmove smacking into a stronger intermediate-term downtrend. In the vast majority of similar situations, the near-term upmove fails on its first attempt to hurdle and sustain above the more dominant medium-term downtrend.

My near-term work is telling me that the current situation in the XLF will not be the exception: the price structure may make another attempt or two to hurdle and sustain above 14.35, but will fail ultimately and reverse into a correction that presses towards a retest of the breakout plateau at 13.20-13.00.

By Mike Paulenoff

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com) , a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of

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