Financial Slct Str SPDR Fd (NYSEARCA:XLF) — This ETF seeks to track investments in the publically traded stocks of companies in the Financial Select Sector Index, investing at least 95% of its assets in those stocks. It offers exposure to the following sectors: diversified financial services, insurance, commercial banks, capital markets, REITS, consumer finance, thrifts and mortgage finance, and real estate management and development.
XLF carries an “overweight” rating by S&P Capital IQ. It is currently trading slightly above its net asset value (NAV) of $24.24. It has an annualized dividend yield of 1.67% and a very low expense ratio of 0.15%.
The top 10 holdings in XLF are Wells Fargo & Co (NYSE:WFC), Berkshire Hathaway Inc. (NYSE:BRK.B), JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corp (NYSE:BAC), Citigroup Inc (NYSE:C), Goldman Sachs Group Inc (NYSE:GS), American International Group Inc (NYSE:AIG), U.S. Bancorp (NYSE:USB), American Express Company (NYSE:AXP) and Simon Property Group Inc (NYSE:SPG).
The chart indicates that XLF has established a well-defined bull channel. It is supported by two recent buy signals from my proprietary indicator, the Collins-Bollinger Reversal (CBR), and the conjunction of its 200-day moving average and a support line connecting the December and March lows, at $23.79. The overall bullish support line of the channel is just under the 200-day moving average.
Since the pullback from its multiyear high at $25.14, made in late December, to a low of $22.89 in January, XLF has been under broad accumulation.
Buy XLF at the market price with an intermediate-term trading target (six months) of $27.50 for a return of 13%, plus its 1.67% yield.
