$XLF Long - Watch the end of this monthPushing hard on the top of a rising wedge. Monthly candle needs to close green.
XLF trade ideas
XLF- Cant Hide From The TruthWe are in interesting times in the markets
If you have followed us at all you know that we have been pounding the table for the last couple of years that the markets are heading for a GENERATIONAL TOP
Of course as with all Bull markets we have seen almost parabolic price action in some markets at points over that time period since
And of course you see some interesting calls regarding where the markets are heading
Just yesterday we saw calls for SPX 7500, 8000, 10000, etc
While all of those levels are theoretically possible, a trader makes money on whats probable
And the clearest chart we have on where markets are heading is found with XLF
Without turning this into an Elliott Wave seminar we have 2 clear as day patterns that signal the end of the 5 wave impulsive move that started off the Covid lows
ANYTIME you see a triangle appear in a wave that means the NEXT move you see is the LAST move of that wave...and once that final move completes you can expect a significant retracement
As you see we have a by-the-book triangle in the Wave 4 position
But wait theres more! (in our best infomercial voice lol)
Along with the triangle an ENDING DIAGONAL has formed in Wave 5
Ending Diagonals, like triangles, also signal that a wave is ending and a retracement is next
So in a nutshell, we have a clear triangle in Wave 4 that told us the next move (Wave 5 in this instance) would be the last move before a significant retracement AND we are in the final stages of an ending diagonal in Wave 5 which signals that the Wave 5 move is over
Here is the last piece we want you to know:
Triangles are almost COMPLETELY RETRACED 100% OF THE TIME
And as XLF goes so do the broader markets....get ready
SPY/QQQ Plan Your Trade: 10-16 UpdateLearn to watch for signs of major market contagion by watching key sectors.
In my opinion, the biggest sectors: Like Transportation, Financials, Gold, and Crude Oil, will lead any major market collapse - often by 7-10+ days.
This videos highlights what I believe most traders need to watch in terms of understanding when/where opportunities are for long trades while attempting to gauge risks related to any type of broad market collapse event.
Spend some time looking over this custom Crash Index and let me know if you see any correlations related to when the SPY/QQQ move more than 7-8% downward in any sudden price moves...
(XLF+IYT+GDX+XOP)/4
Get Some.
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XLF- The ImplicationsAs with SPX, XLF is headed to what we think is a MAJOR TOP
We will save the long diatribe but the implications of this are disturbing to say the least
What are the implications?
Increased layoffs
Increased unemployment
Increased Bankruptcies
Bank Insolvencies of various levels
Restrictive Credit in spite of rate cuts
Etc, Etc, Etc
Prepare yourself
Are financials topping? XLF hitting major resistance.
JPM hitting major resistance.
Financial have been putting a very strong bid under the SPY & IWM
If financials are topping here i do think it will be a major headwind for the market.
I'm watching to see if the Fed rate cut becomes buy the rumor sell the news!
Are financials topping here? Financials have been one of the leading and strongest sectors on the back of rate cut narratives.
The resilience and strength can easily be observed...
XLF has been making new highs despite the QQQ & SPY not.
Now it begs the question; is all the rate cut priced in?
We think financials are set for some downward rotation.
If this rotation occurs it opens up many other opportunities as financials do carry some decent weight in the indices.
Today names like JPM & XLF gave us a potential daily topping tail.
XLF- We Hope We Are WrongXLF is heading to a significant crossroads
We will get into the details of the price structure in a future post but know that we STRONGLY feel XLF is heading towards a MAJOR TOP
SPX is in a similar position and its downturn is going to amplify XLFs speed lower
As we said previously this will definitely rattle world markets
As the Banks go, the markets go
Boy we hope this is wrong...
XLF ETF ATH breakout . US ETF44.30 above breakout possible
43.50 below trade invalid
expecting strong breakout
if sustain 45/46/47 expected to test soon
XLF- This Isnt GoodAs those who follow us know we have been warning about XLF and the story we are seeing within the price structure
As the Financial Sector goes..so does the rest of the markets
I really truly hope we are absolutely wrong about this call because this is definitely going to rattle world markets
XLF PREDICTION 44 to 50 to 55XLF long term hold predictions.
I think we are going to cover 44 short then push higher to 50 then 55
Retail traders are gun shy. XLF and XLP is leading the way...Retail investor who are looking for longs are largely gun shy and sidelined after this dramatic selloff. Choppiness in indices are keeping them there. Indices have not been able to clear a resistance, but both XLF and XLP have cleared above resistance levels. I expect the broader markets to follow XLF as inflation data is released.
I expect price action to be fast next week. As retail shortsellers are bagholding positions, the squeeze on the next leg up should force them to cut their losses.
XLF downside to 28.50 over the next year?Why do I think XLF may be a potential short?
There are many economic catalysts this year:
The Fed is monitoring interest rates and may still make adjustments. Some market consensus tools suggest 1-3 rate cuts this year (of 0.25% each), while some sources suggest that the economy is still resilient, and rates need to still be increased. Regardless of that, rates have historically been cut when something has broken and they need to re-stimulate the economy.
NY Community Bank has a fair amount of toxic assets on its books. While it had plenty of cash last year and was able to bail out other regional banks, it also holds an amount of commercial real estate debt, which was issued when interest rates were much lower. A large amount of it comes due this year, and now they may have difficulty servicing it. This is one example of how the bank defaults have not finished happening, and that last year was only a temporary solution.
Many large companies have recently posted massive layoffs, between 5 and 15% depending on the company. Most of it is in the tech sector. However, this indicates a slowing economy (despite recent numbers looking very good), and companies are proactively cutting the fat to save money. If they cannot grow their margins by increasing revenue, then they will look to cut costs. Commercial real estate is also likely to see a number of failures, for similar reasons (and this ties into the above reason).
The 10Y and 2Y interest rate yield curve is still inverted. Historically, once it uninverts, rates tend to rise rapidly and the equity market trends downward sharply. This is very likely to happen again (there was only one time in the US where this was not true), but whether this occurs in a month, in a year, or in a decade is anyone's guess. But it is still a potential catalyst.
In light of the above reasons, one potential way to play the downside is to enter a bearish spread. I am choosing XLF specifically because it is a low volatility sector, which means that put contracts are much less expensive.
Around the 31.00 level, we see support and resistance from around the year 2020, breaching it in 2021, and finding support throughout 2022; it is natural, then, that this acts as a pivot that can be broken through in a bear market.
Using fibonnaci levels from the previous 2020 low to the all time high, we find the midpoint at 29.60, which is another possible level.
Finally, using ATR and projecting the sqrt(ATR x N), we can estimate roughly where the price might fall by a certain date. From the previous ATH, this gives us a range of 26 to 56 (approximately). From the current closing price, we get 32 to 46. However, going two units away (solid teal line) brings this to 25 on the low side. This overlaps towards the one-unit low range from the previous ATH.
If I had to pick a specific range for Jan 2025, I would estimate the bear case to be 27 to 29 dollars, based solely on market technicals.
US Banks Set a Bullish Tone at the Start of Earnings SeasonUS Banks Set a Bullish Tone at the Start of Earnings Season
Company earnings reports for the second quarter will be a crucial driver of stock market movements in the coming weeks. Traditionally, the largest banks kick off the earnings season, and their performance indicators today are setting a bullish tone.
For example:
Bank of America (BAC), report published on 16th July:
→ Earnings per share: actual = $0.83, expected = $0.797;
→ Gross income: actual = $25.37 billion, expected = $25.22 billion;
Goldman Sachs (GS), report published on 15th July:
→ Earnings per share: actual = $8.62, expected = $8.35;
→ Gross income: actual = $12.73 billion, expected = $12.35 billion.
Other major banks, including JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC), have also surpassed analysts' expectations. Although following different trajectories, the stock prices of all the listed banks have generally been rising after the publication of their earnings reports.
Notably, the formation on the XLF chart is interesting – this is the Financial Select Sector SPDR Fund ETF, which is focused on the financial sector and includes the shares of the largest US banks. You can trade this ETF with FXOpen, taking advantage of CFD instruments.
Technical analysis of the XLF chart shows that:
→ In 2022-2023, the price was in a broad trading range of 30.70-36.6;
→ In 2023-2024, the price formed an upward channel (shown in blue);
→ The median line of this channel acts as support;
→ Rising lows A and B resemble a bullish Cup and Handle pattern.
In the wake of the successful bank reports:
→ the XLF price broke through the 42.20 level, which had been acting as resistance since the end of March;
→ the RSI indicator entered the overbought zone.
It is possible that amid positive earnings reports from other companies in the financial sector:
→ the XLF price could reach the upper boundary of the blue channel;
→ the RSI indicator could form a divergence;
→ subsequently, a correction may form on the chart as investors may wish to lock in profits from the rapid growth.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
S&P 500 Financial SectorOverview of the S&P 500 Financial Sector
The S&P 500 Financial sector is one of the eleven sectors in the S&P 500 index, representing a broad range of companies involved in financial services, including banking, investment, insurance, real estate, and diversified financial services.
Key Components
Banks:
Major players include JPMorgan Chase, Bank of America, and Wells Fargo. These institutions offer a variety of services, including consumer and commercial banking, asset management, and investment banking.
Insurance:
This sub-sector includes companies like Berkshire Hathaway, AIG, and MetLife, which provide life, health, property, and casualty insurance.
Investment Services:
Firms such as Goldman Sachs, Morgan Stanley, and Charles Schwab fall into this category, offering investment banking, trading, brokerage, and wealth management services.
Real Estate:
This includes real estate investment trusts (REITs) and real estate management firms like American Tower Corporation and Prologis, which own and manage properties and generate income from leasing and property sales.
Diversified Financial Services:
Companies like Visa and Mastercard offer payment processing and other financial technology services, while firms like American Express provide both payment and lending services.
Performance Indicators
Interest Rates: The performance of the financial sector is closely tied to interest rates. Higher interest rates typically benefit banks and other lenders by increasing their net interest margin, the difference between the interest earned on loans and the interest paid on deposits.
Economic Growth:
A strong economy boosts the financial sector as businesses and consumers borrow and invest more. Conversely, economic downturns can hurt financial firms due to increased loan defaults and reduced investment activity.
Regulatory Environment:
Changes in financial regulations, such as those implemented after the 2008 financial crisis, can significantly impact the sector's operations and profitability.
Recent Trends
Digital Transformation:
Many financial companies are investing heavily in technology to improve customer service, reduce costs, and stay competitive. Fintech innovations such as blockchain, mobile banking, and automated trading are reshaping the industry.
Mergers and Acquisitions:
The sector often sees significant M&A activity as companies look to expand their market share, diversify their services, and achieve cost efficiencies.
Interest Rate Environment:
Recent years have seen historically low-interest rates, impacting banks' profitability. However, expectations of rising rates due to inflation concerns could benefit the sector moving forward.
Investment Considerations
Dividend Yields:
Financial stocks often offer attractive dividend yields, making them appealing to income-focused investors.
Valuation Metrics:
Key metrics for evaluating financial stocks include the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, and return on equity (ROE).
Risk Factors: Investors should consider risks such as credit risk, regulatory changes, market volatility, and economic downturns that can adversely affect the financial sector.
Conclusion
The S&P 500 Financial sector is a diverse and vital part of the overall market, influenced by a variety of economic and regulatory factors. With ongoing digital transformation and potential benefits from rising interest rates, the sector presents both opportunities and risks for investors. Understanding these dynamics is crucial for making informed investment decisions in this sector.
XLF- Nope Nothings ChangedXLF....
I could on long diatribe about the Banking sector and financials and the economy...
But I'm not
You want to know why? (i'm going to tell you regardless)
It's because deep down you know that the Banking system is a house of cards and these Bankers..JUST..CANT..RESIST..THEMSELVES
SHORT XLF...for now...and then a Big Short (pun intended) later
(i'll show the "later" on anther chart at a later time...hint see that big horizontal white line well below the "C"...thats the destination for the other "later")
XLF Breakout?Bank earnings start this week so I'll be watching XLF. It is near major trendline resistance and a prior high. If it can break above, we should see a move up for XLF over the next few months. Otherwise, it could fail and head back to the lower end of the range.
XLF To RallyXLF normally moves quite slowly, but we may may be at a moment in which that accelerates substantially, even improving on what has been a phenomenal year.
Weekly -
Daily -
The EW path drawn is what may be expected most commonly - we're looking for that or better.
Do you trust financials to break out here? $XLFBelow I show you a longterm AMEX:XLF chart that has had a complete rocket higher without any consolidation in price.
In my opinion XLF cannot break out here without some consolidation back down in price; and then maybe it can retest and breakout; but I don't think it can do it on the initial attempt...
I may be wrong, but you can place your bets accordingly.
Goodluck!
XLF Weekly ChartsWell we've been here before with financials. Are we ready to go ahead and move along from this level? I'LL be completely honest I don't like that wick on last weeks candle, but we still closed green making it the 10th positive week. Regardless of what I believe the chart is the chart.
ToppingXLF has been up on the weekly without any major pullback since October, 2023. Now the rally has reached major resistance from previous ATH and with a series of 3 bearish divergence in RSI, the 5-wave rally from the October lows has either topped or is near a top. The rally is also getting less steep falling under the trend line. The next big move is likely to be down with the looming FOMC event on Wednesday.
$XLF: Financials are unloved and ready to rallyInteresting long term trend in AMEX:XLF here, paired with record low positioning for hedge funds, makes for a low risk vs reward and highly appealing long setup.
Additionally, paints a positive picture for the broad market as well.
I present to you the sector ETF, now it's up to you to find the hidden gems in the sector that will likely reap the largest rewards...I will try to find these and report to my clientele of course.
Best of luck!
Cheers,
Ivan Labrie.
