XLF trade ideas
Financials; Dead MoneyThis has got to be the tightest range on a monthly chart for any sector. The direction it goes is crucial for the market.
$XLF ... (BEARISH!)Liquidity keeps drying up and the feds have decided they'll get back in the market (officially) soon, maybe they will solve everything.
If someone knows how banks can survive this environment of negative rate that we're heading toward, please...
***Let's talk about it...***
A subtle but potentially EXTREME danger in the financial sectorOf all the sectors in the American stock market, I believe the financial sectors exhibits the most dangerous chart pattern at this point, because it is the *only* sector that has not managed to achieve ATHs since the Great Recession. This could mean a multitude of things. The most positive scenario is that it is just lagging and will soon burst to ATHs with significant strength, along with the rest of the market.
However... pay close attention to the relentless declining volume and extreme RSI divergence in recent years. If I was a statistician, would those signals give me confidence that this most positive scenario will take place?
Now let is consider the most negative scenario. That is... the 2008 low was only the beginning or the middle of the decline and a total and utter destructive final phase will eventually follow this 10 year *corrective* rally.
What era are we approaching? Revival of traditional currencies? Or rise of cryptos?
Take care, friends. We live in times that spell caution. That is all I can conclude, for nobody knows the future.
Exhaustion gap Short term short tradeen.wikipedia.org(chart_pattern)
There are four types of gaps, excluding the gap that occurs as a result of a stock going ex-dividend. Each type has its own distinctive implication so it is important to be able to distinguish between them.
Breakaway gap – occurs when prices break away from an area of congestion. When the price is breaking away from a triangle (Ascending or Descending) with a gap then it can be implied that change in sentiment is strong and coming move will be powerful. One must keep an eye on the volume. If it is heavy after the gap is formed then there is a good chance that market does not return to fill the gap. When the price is breaking away on a low volume, there is a possibility that the gap will be filled before prices resume their trend.
Common gap – also known as an area gap, pattern gap, or temporary gap, tend to occur when trading is bound between support and resistance level on a short span of time and market price is moving sideways ("where the price trend...has been experiencing neither an uptrend nor a downtrend. Instead, the price activity has been oscillating between a relatively narrow range without forming any distinct trends"). One can also see them in price congestion area. Usually, the price moves back or goes up in order to fill the gaps in the coming days. If the gap is filled, they offer little forecasting significance.
Exhaustion gap – signals the end of a move. These gaps are associated with a rapid, straight-line advance or decline. A reversal day can easily help to differentiate between the Measuring gap and the Exhaustion gap. When it is formed at the top with heavy volume, there is significant chance that the market is exhausted and prevailing trend is at halt which is ordinarily followed by some other area pattern development. An Exhaustion gap should not be read as a major reversal.
Measuring Gap – also known as a runaway gap, formed usually in the half way of a price move. It is not associated with the congestion area, it is more likely to occur approximately in the middle of rapid advance or decline. It can be used to measure roughly how much further ahead a move will go. Runaway gaps are not normally filled for a considerable period of time.
The beginning of the growth of relative strength in the financiaAn interesting situation unfolds in stocks of the US financial sector
a very rare reversal signal has arrived - only the 3rd (!) such signal since 2009 in the financial sector S&P 500,
this was in 2009, 2016 and now here again this week.
Relative Strength - the relative strength of the XLF financial sector ETF has broken the trend line of the weakening cycle since 2018, and just the last 1.5 years, banks have been weaker than the market and have been underestimated for a long time, and now, as we see last week, a certain rotation has gone from grwoth sectors to the most undervalued securities, including banks in the US market.
As can be seen from the graph, this happened since 2016 when the RS sector came out of decline and sharply went higher. That is, the outperfom of the sector went against the S&P 500 - a cycle of strengthening the sector against the market as a whole.
And six months after this moment, ETFs in the financial sector added + 38%, while the S&P 500 only + 11%, almost 3 times ahead of the entire market.
XLFLook For Short but don't expect huge profit it looks like it is going to be cup and handle trade I Will short that zone above the price . I'm aware of that cup and handle can come to play in few days or weeks.
Introduction to EW Theory - Planning the first analysis - Part 2The XLF weekly chart corresponds to the example of our article "Introduction to Elliott Wave Theory - Planning the first analysis - Part 2".
Do we hold go higherAll up to XLF , I say we hold some story will come out big question is how far can we rally 295 is easy but can we get thru we are still basing here and in down trend, but lets see next few days.
Stay hedged though i am out all short but have TVIX .
We break 295 long king Kong to 302 maybe higher maybeIts all up to banks, like i said before we break that 295 boom we go, but we have not broken yet. Witting see happen Tuesday Monday Holiday, market back normal by wed we will know. I have orders buy spume SPY GS LONG
Watch CAT guys
XLF fib extension chartpush to resistance around 27.50 or failure and to the downside to retest support
yield curve inversion... prepare for gamma riskall good things have to come to an end, but man o man. the banks are about to loose all resemblance of control. im a vix trader, so when i see the yield curve i instinctively see a commodity curve. when the front month risk is worth more than the back end risk ie gamma jamma. the perception to participants is to sell the front month buy the back month. in a normalized curve you'd want to buy the front end and sell the back end. the spread between would cause natural decay/ lower volatility. with the front end above the back end, risk is forwarded creating the likelihood of outsized moves. while in consolidation i say brace for an epic downside shift, but post downside shift sell outside call spreads or butterflies. right now, we're officially on borrowed time
Correction for XLFFinancials are looking to correct. This coincides with S&P 500.
We will more than likely bounce off of support.
The fin.sectorThe financial sector is well known as the lifeblood of an economy. Financials have dominated the markets over the past years with their uptrend.
If we take a look at the XLF, Financial Selected Sector SPDR Fund, for example, we can see an uptrend in this sector since the end of economic crises. Just in a 5y XLF is up more than 22%.
Note that the price movements in this sector can lead to major cyclical moves. The current prices and the growing sense of geopolitical tension could be a reason to re-evaluate exposure there.
XLF failed breakoutXLF has failed its breakout and lost the 20 dma on heavy volume. Seems to be reacting to the expectation of more rate cuts which are not favorable for banks. Looks like it could sell off into the 200 dma which has some confluent fib zones and is at a price volume pivot.
Financials - Upward BreakoutFinancials broke out of its recent range today, entered half position in $FAS and will enter the other half on tomorrow retrace if there is one.
If not, will look at how the price action plays out. More updates to follow.
FINANCIALS JULY MONTHLY 2019 (DETAILED-END OF THE CYCLE TA)One major detail that stands out is the 30-31$ resistance. In order to continue its bullish run it must close above these levels.
Although this might be a tough task since we are in the late stages of the cycle. My focus in the next year will be this exact sector, since most banks will not be able to hit the same profit margins due to the inversion in the T. bonds yield curve(unless they take on more leverage).
Systematic risk(Beta) has overall increased, because of the trade uncertainties with China.
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Full Disclosure: This is just an opinion, you decide what to do with your own money. For any further references- contact me.
XLF ShortBought weekly puts here cheap. Looks toppy, hit resistance, and why the heck are financials rallying while rates are inverted?!?!
Small position.
