Financial Sector Buy Signal ?

We all know that real estate has taken a beating with falling home prices and an increase in forclosures. This resulted in the financial sector having big write offs and being the leader to the downside in the market. The financial sector peak in the market was over a year ago and it has been going down ever since. But has it hit a bottom?

A 20-day 4 hour chart with RSI(14) of the XLF shows the market has made a change in trend, even if only for the short term. The question is: Is this a corrective bounce or a true change in trend for the long term trend? Click on charts to enlarge.

A look at the 6 month weekly chart with RSI(3) of the XLF shows that the RSI is above the 50% mark however the fast band of moving averages are below the slow band and price pressure is to the downside.
If we are to make decisions based on the long term direction of the market to avoid losses and minimize risk we need to move up to the level of the long term time frame. For this I follow Martin Pring who uses a 12 moving average on the monthly chart. A 3 year monthly chart shows we are a long way from an end to this downturn. The XLF would have to rise over 22% to even touch the 12 moving average.
In conclusion, while we have a short and intermediate term buy signal the long term trend is down in the financial sector and unless there is a change in the housing market and a sustained move to the upside it is best to avoid this sector. Bottom fishing is risky in the markets.