XLF : Time For Financial Sector to Break Out of its Base

In mid-July, earnings were better than what analysts had anticipated. The rally started picking up steam on July 15, thus a breakaway gap had formed in the DIA, SPY, and the QQQ's. A breakaway gap is one of the most reliable chart patterns. This helped build clarity on where the market was going from there.

I remember the head and shoulders top that failed in mid-July. I took a short before it had punctured the neckline and had to cover my position after the market recycled back above the neckline. The head and shoulders became invalid becoming what appears now as a simple abc correction. This correction in the $dji was roughly 9.7%. Ha! That wasn't much of a correction if comparing the right shoulder of the Dow in 2003. The right shoulder of 03' extended much lower.

Furthermore, many financial stocks benefitted from this rally in July. Some examples from mid-July to mid-August include Bank of America making roughly 40%, Citigroup 100%+, US Bank 40%, Fas (300% long financial etf) 120%+, Fifth Third Bancorp 60%+, and too many others to mention. Moreover, there shouldn't be any rotation in less volatile sectors while banks still present good valuations. Fifth Third Bancorp looks attractive for example in that Fifth Third Bancorp's earnings beat by $1.49 July 23. However, I want to caution that earnings still need to exceed analysts expectations or stay up to par. Otherwise, expect consolidation until earnings power returns. Fifth Third Bancorp missed earnings by 0.03 October 23 and had a 23% decline as a result. This allowed for the bank to return back to its pivot point from where it broke in July. F.T.B has recovered entirely from its decline and earnings will be announced January 21. I might take a position soon in Fifth Third Bank if it can close above its 11.20 pivot point without struggling. XLF, Financial SPDR etf, is showing that it wants out of its base after consolidating roughly 5 months.