Shares of the Financial Select Sector SPDR Fund (XLF) have made a pattern of three lower highs and could soon retest their early March nadir. Let's check out the charts of the XLF and I will leave the discussion about the yield curve and the possibility of a slowing economy to others.
In the daily Japanese candlestick chart of the XLF, below, we can see that prices recently closed back below the 50-day and 200-day moving average lines. Trading volume declined in March as prices rallied and that is not the pattern that old-time chart readers like to see. Volume should expand in the direction of the move, in this case up into late March. The On-Balance-Volume (OBV) line made a minor bounce in March and has turned lower again. A new low for the move down on the OBV line is not hard to imagine right now.
The Moving Average Convergence Divergence (MACD) oscillator has narrowed and is close to crossing below the zero line for an outright sell signal.