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Financials

Will the financial settle with this pullback? Financials, which have been driven higher by the Fed and the ECB, is in an interesting sell zone. We have minor structure level as well as the top of a rising Wedge. We've already seen false breaks in both sides of the Wedge as the ETF ranged from 25$ to 23$ and now, judging by the decrease in volume $XLF may be setting up towards its next strong move. Above 24$ we will probably see the re-test of previous highs and even new high. I don't like the R/R for the upside trade. The bearish setup here is to trade the sell zone and place a stop loss above previous high. The potential targets (if the price will break below the lower trend line (dashed green) will be the 200 SMA line and the 22$ support zone
AMEX:XLFShort
by themarketzone
2
Next Fin. Crisis?It's been more than 6 years since the last major financial crisis occured in 2008. If we assume financial crisis come out almost perodically in every 8 - 10 years then I think it's time to start thinking whether we are close to the next one. 10Y US treasury notes have always been preferred investment tool for non-risk takers regardless to the financial environment. But what about 2Yr treasury bonds? Can it tell us tell of something different? So I looked at how the spread between 10Y and 2Y notes changes. I took the difference of 10Y and 2Y note yields (drawn in blue line) and looked how it changes with time. I marked with green circles where the spread is equal to 0 (10Y yield = 2Y yield) First 1990, second (little one) 1998, third 2000, fourth 2007. I'm sure you're very familiar with these years:) Before every major crisis 2Y note yield became equal to 10Y note yield. Why? Because smart money managers see the uncertainty and the approaching crisis in the market and move their money from short term bonds. Up to this point maybe that was what you heard before. But can we predict the next crisis time? So when I drew 2Y note yield (red line), I noticed the 2Y note yields at the time of crisis are decreasing linear starting with 9,55% in 1990 and ending with 4,92% in 2007. (the green descending trend line) This confirms today's ongoing deflationary markets in all over the world. If we assume the trend will continue as it is, 3 - 3,5% would be most probably the next 2Y treasury note yield at the time of the next financial crisis. If we look at the FED rate history, we see the fund rate is pretty similar to the 2Y note yield. So did you recall the FED fund rate projections for the next years?? Most of the FED members project the fund rate will be around 3,5% at the end of 2017. Bingo! And also in 2017 we will have had 9 years after the last financial crisis. Be careful in 2017 if the spread of 10Y and 2Y notes yields close to each other.. www.federalreserve.gov
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by REDRUNNER73
Risk Averse Market - 2015 First and Second quartersWhat I am not showing here is, that the Cyclicals are losing steam, Sensitive Market is in neutral trend, Defensive has been the buyers paradise since OCT 2014. Why I think that this can be called as a Biotech Bubble is because, It has done the same exact thing Financials did in 2007. ie., Moved tooo quick tooo far. Yes Bio Tech (Healthcare) sector is a defensive sector, but this is not "the normal" on a defensive sector. What could fuel this bubble burst ? That's up to the Govt, and the Medical Insurances out there. Most Medical Insurance at this point is so frustrated with the high Drug / Healthcare provider prices. //////////////////// Note : This is not a Doom and Gloom Idea to trade. Its just my opinion - I am personally taking cautious actions with the market, that is reducing the risk to 1% or under in a trade. And focus on the Strong and Weak Sectors, Rather than the mixed bag. This may not happen until second quarter of 2015, or even mid 2015. While the trend is up, I am still bullish. Until there is a transition. Related Ideas - Show how trend changes again IMO.
SP:SPX
by UDAY_C_Santhakumar
15
BAC continuation move, weakness after H&S resolved to downsideBanks also continue to look very weak as Bank of America (BAC) broke lower out of a lower level consolidation. The stock gapped down on it's earnings. Now we have point of reference at $14.71, if it will go through previous low of the day I will be considering Short option. Resistance at $14.86 then $15.00, if price will pullback to that area I expect to see some selling. Overall, financial sector shows relative weakness vs broad market and with futeres down we can see some continuation move down in this sector.
NYSE:BACShort
by andrew.berg
1