$XLF $SOFI

XLF, the setup is bearish. The reason is sector wide concerns that AI could disrupt workflows and automate some roles in areas such as banking, insurance, and asset management. The decline in SOFI is not coming from company-specific problems; in addition to the AI-driven selling pressure across the financial sector, the dilution effect from SOFI’s $1.5B stock offering in December 2025 also created pressure. Other factors increasing sector pressure include sticky inflation, expectations that rate cuts may be delayed, trade/tariff uncertainties, and rotation from growth stocks into more defensive areas. If SOFI is viewed as a tech-focused disruptor that uses AI in its operations (Galileo, Technisys), some of the money coming out of traditional banks may eventually want to park here. On the other hand, algorithmic fund flows usually operate with a “sell the sector” logic. For this reason, when there are ETF outflows, the good names are punished together with the bad ones, and SOFI may be punished on financial multiples while its technological strength is ignored. If the market is selling Old Economy (banks) and buying New Economy (AI), SOFI should, on paper, stay on the New Economy side. There is no direct stock ownership link between SOFI and XLF, but the same sector ecosystem closely connects them. This connection will strengthen when SOFI enters the S&P 500...