The latest development in the "financials trade" we discussed early this month: XLF is moving in favor of the bulls.
Several weeks ago, our colleague Jeff Clark argued the financials were likely headed lower in the next few months. We also noted that John Paulson, a guy some consider to be the world's best, richest speculator, is betting heavily on the financial sector rising this year.
There's an easy way to tell who's right on this one... watch the big financial fund, XLF. This fund is loaded with the biggest names in American finance. As we noted earlier, XLF has traded in a tight range between $14 and $15.50 per share since August. A fresh "breakout" in either direction would tell us who is right... at least for a few months.
As you can see from today's chart, XLF is not just "knocking on the door" of $15.50, it's pounding on it. Shares have enjoyed a big rally, climbing within a whisker of their October 2009 high. A break above $16 puts this asset back into an official bull trend... and lets us know the great "handouts and bailouts" program is keeping asset prices afloat.
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