XLF trade ideas
Financials are a good Proxy for this market $XLFDecision time is approaching in the Fins and they will most likely show the way for the rest of the market. Volume has been steadily falling indicating exhaustion is near, whether it is by buyers or sellers remains to be seen. Personally I favor buyer exhaustion, which would lead to a test of 200MA hourly and the fib at 24.85ish. Seller exhaustion would target 27.50. Break of the triangle is key, but beware fakeouts. Whichever way XLF decides, SPX should follow. Upwards it could squeeze as high as 2870, downwards the familiar 2500 area awaits.
Financials (XLF) Bullish Wedge or forming Head of H&SFinancials have sputtered as of late, and this can be interpreted in two ways:
Scenario 1: This is a bullish wedge and because of expected future interest rate hikes financials will break out and create new highs in the $32 -$35 range for the AMEX:XLF . Supporting this is the RSI hit lows previously seen on 3/22 and all the way back to the beginning of 2016. Stoch has also recently hit a low and moving upward.
Further, the selling pressure has been strong but the stock has remained in the bullish wedge pattern.
Scenario 2: Selling pressure will break through the wedge formation and the stock will retrace to the ~$23 level. XLF has declined following almost every recent interest rate hike. Stock will retrace to $23 then bounce off support and subsequently fall after hitting resistance (previous support line for wedge).
In the market we are in, I would error on the side of the trend (bullish). However, based on the way financials have behaved as of late, I would not be surprised if scenario 2 would occur. Either way, breakouts either way could be quite profitable if the proper stops are put in place.
SPY, QQQ, and XLF face key resistance tests this coming weekThe oversold bounce is real and bulls have changed the daily trends to their favour, but the weekly trends have yet to change. Here's what I'm looking for heading into next week - We have tight ranges on SPY, Tech and Financial sectors and the breaks of these ranges will give us clues for what to expect this coming week
XLT SHORTEntered yesterday and position, via options, and ended up about where we entered minus a few $ for commissions and option spreads.
Today on 195 minute bars we see a 50% retracement from yesterday, the price just at LT resistance and a very tight triangle. Plan to go short at 24.02 with target around $22 or lower.
Interest rates don't matter for XLF, lolSo here we are, right back to the same price level as the last Fed rate announcement. Complete retrace of the tank for XLF, along with AMZN. In fact, retail XRT is actually higher than it was before the announcement, because apparently neither banks nor retail care about interest rates, lol. Look at HYG, corporate bonds are right back up there as well.
If the market makes any sense, this will trade between here and $22 for a while then H&S down to $19 eventually. However, nothing seems very logical in this market (look at the price action on GOOGL), for all I know, they can jack the market right back up.
My best guess is a down week next week with a possible double bottom the following week (see my SPY post). I doubt they can jack up the Dow by 800 pts again next week, so at least there's a chance that crappy stocks will go down. Let's just hope they don;t melt the market up like last January.
XLF shortXLF in downtrend
Retraces to form triangle
Cannot close convincingly above blue trend line.
Stops at previous support which is now resistance and at 0.786 retracement
Fractal flow shows down turn.
Conservative entry is for it to break lower border of triangle, aggressive is for it to breat last 130 bar.
SL just above yesterday's high.
Frst TP it at 22.11
TRADE IDEA: XLF JUNE 21ST/FEB 15TH 21/24 UPWARD CALL DIAGONALMetrics:
Max Loss/Buying Power Effect on Setup: 2.18/contract
Max Profit on Setup: .82/contract
Break Even: 23.18 vs. 22.81 spot
Debit Paid to Spread Width Ratio: 72.7%
Theta: .26
Delta: 37.46
Notes: Here, I'm just shopping around for particularly weak sectors in which to put on bullish assumption plays that will have plenty of time to work out and/or reduce cost basis in. Typically, I shoot for a break even at or below where the underlying is currently trading, but am settling for a <75% debit paid to spread width ratio with a less than ideal break even here than what I typically do. Consequently, I'm paying less at the door than I ordinarily would, but still have a shot at getting a 27.3% return on cap invested in the event price finishes below the short call.
Impending Recession?Quick TA on XLF, we see a clear double topping pattern, looking for the short term moving average in green / or support from the uptrend channel.
We should expect a bounce or bear flag formation. It this fails on support, likely to capitulate downwards toward $16. Stochastic RSI remains bearish at least for now.
$XLF Financials ETF - Oversold at Support$XLF Financials ETF - Looking oversold on the daily chart after closing red or flat for 8 straight trading days. Ending the day today right at a key support level just under $24. A bounce in the coming days definitely hinges on the FED not raising rates tomorrow . If they do nothing, I expect a near term price recovery in the XLF back to the $25-$26 range by year end.
With a lot of people expecting the worst, call options are looking fairly cheap in my opinion. I'm looking at the Dec 31st $24.00 strike calls that closed today around 40 cents. With a break even (excl. commissions) of $24.40 and the ETF closing today at $23.91, you would only need a ~2.1% move up from today's close to reach break even and you have about two weeks to do so. Depending on your risk appetite, you could move to the higher delta ITM (in-the-money) calls if you prefer.
If the FED does end up raising rates tomorrow, I think we could easily see $23 or worse by year end. Hedging with a straddle or strangle options play would probably be the smartest approach. But as in everything, higher the risk higher the reward.
Note: Informational analysis, not investment advice.