Which Way Will the Market Go? Continued.

Trader Mike noted the same triangle patterns emerging on the S&P charts as I did in yesterday's post. He also looks at the financials, and raises an interesting question:

The XLF has resisted following BAC to its January lows and beyond… so far. It looks like it’s ready to fail but I guess sellers aren’t willing to sell all the financials off ahead of the announcement of the gubbermint’s rescue plan (or whatever it’s called). But do we get a “sell the news” reaction once that plan’s been announced?

The gap-up in shares of XLF on the 28 of January arose out of rumors of a 'bad bank' plan supported by Sheila Bair at the FDIC. The ensuing sell-off occurred after critics questioned whether the 'bad bank' plan was the banking industry's white knight, or merely one option of many under consideration by the Obama administration.

So will we see the financials pop next week as an announcement approaches, followed by a sell-off on the news? Or will we see continued downward moves in this sector?

Considering the whipsawing volatility in the financials this morning (thanks, BAC), it looks as though noone is really sure what's going to happen.