Pullback Within Incomplete Upleg for Financial ETF

Let's have another look at the pattern that is unfolding in the Financial Select Sector SPDR (NYSE: XLF), which is my proxy for determining whether or not to enter its inverse ultrashort counterpart, the UltraShort Financial ProShares (NYSE: SKF).

Yesterday we discussed the near-term pattern off of last week’s high at 13.15, which indicated that the XLF “has room” to press into the 11.35/00 area without triggering significant sell signals.  The slide towards a test of the 11.35/00 area continues this morning (low so far at 11.47).  My pattern and momentum work argue that unless and until 11.00 is violated, all of the action off of last week’s high at 13.15 is a pullback within an incomplete upleg from the 3/06 low at 5.88, which if accurate will result in an upside pivot reversal and new upleg into new high territory projected to 13.50/80.  For now, I will follow my work, rather than anticipate either an upside reversal or a breach of 11.00.