I watch the BMO Equal Wt. U.S. Bank ETF (ZUB-TSX) as my benchmark for that sector. I’ve traded it successfully in the past – my last trade being a buy in October 2013, and a sell in March of this year. This ETF is TSX listed and hedged to the C$.
Right now, I am waiting for the US banks, represented by this ETF, to break out of the consolidation pattern that it has been stuck in since my sale. I will not buy this ETF until it breaks through what appears to be very strong resistance at $21/share.
Signs are questionable as to when this might happen. As you can see on today’s chart – moneyflow (top and bottom panes) is flat. MACD is diverging—that’s not good. Strength vs. the S&P 500 is flat to declining, and short termed stochastics timing indicator suggests that now is not the time to see this ETF break its $21 lid. I’d expect this ETF to fall back into the $19 area shortly.
Until ZUB breaks $21 with positive moneyflow and volume, I will be avoiding this trade. However, such consolidations can lead to tradable breakouts. Just don’t get caught on the wrong side of the trade if that breakout is below $19!
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