I'm a man who can admit when he's wrong. As I posted early this morning, I fully expected today's government bailout to mean some good news for the financial sector, as represented by XLF. Boy, was I naïve.
Had I been on my toes, this poor brother might've caught a cool 3% or so, as the XLF moved above $20. I didn't sell though, as I was expecting – well, hoping for – an even higher move. It never came, though, and after 1:00 when the bailout was passed by Congress, the decline started. Check out this 2-day chart.
Yesterday, a few minutes before closing bell, I bought a small position in XLF, the ETF that follows the financial sector, at $19.69. I had been watching it all day, and being near it's intraday low I figured it was the best time to snag it.
Since over half of a stock's performance is due to its sector, it is important to have a method to evaluate broad sector and industry trends. As readers of my previous posts may guess, I am quite partial to IBD's industry ranking feature which ranks 197 industry sub-groups according to six month price performance. This level of detail is hard to emulate easily at home, but even simpler systems can give you insight into the market and help you make better informed trades. One easy way to gauge broad sector trends is to track sector ETFs versus a broad market index.
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