fat gap up in financials. what now? (XLF)either were aiming for closure of the gap, or continuation. since the gap is quite large i imagine we continue the bounce as over 40.50 is likely from the size of retracement.
XLF trade ideas
$XLF long idea in a higher rate environmentWith the Federal Reserve announcing rate hikes starting in March, financials should prosper. Higher interest rates ($TNX) means that it costs more to borrow money which is a bullish sign for banks. The economy is also not showing any signs of slowing down, commodities continue to move higher and job reports signal a strong economy. This can be translated to assuming that consumer spending will not slow down; low supply on high demand shows that they will continue to spend and borrow money.
Also, if we look at Treasury Bonds ($TLT), we see some serious selling even though the Federal Reserve continues to purchase. This could lead to a stronger Dollar ($DXY) and a move from growth equities ($ARKK, $QQQ) into cash or savings accounts. During rate hikes, history shows an inflow into companies with high cash reserves, cash flow, and high dividends.
The technical side of $XLF shows relative strength while indices continue to fall. On the weekly timeframe, we can see a clear bull flag pattern that has broken out and if we close above $40 today, we have confirmation. MACD shows a bullish crossover is near and RSI is healthy.
Targets are 43, 45 and 47.
OptionsSwing Analyst
Daniel Betancourt
XLF at resistanceStill not out of the cloud, had a good rebound, but meeting resistance at 50% fib of that upward channel (shaded color area. One could make the argument that it is forming a head and shoulders falling off to the right.
Financials consolidation at late cycleLate cycle usually is good for financials, but what really benefits them is higher rates. The astonishing 6 trln in government bonds will tripple the income. Hopefully a good run before recession hits
financials sector enjoying a lead on indices (XLF)XLF is one of the instruments whose sectore had a larger terminal upthrust than others, and is enjoying a more sizeable bounce than others after the current peak in volatility.
big names like V, PYPL and BAC are putting up enoughbof a struggle to say that they have tolerance to attract inflow from key players (sm, mm, tutes, pros).
it will be interesting to see if we can confirm a higher low before tech returns to help carry the market, making way for a larger comeback that could enjoy a solid outperformance on indices; at least for the time being.
Market Outlook Jan 24 --->28 Breakdown of Each chart
Top left - S&P 500 / General market
Bottom left - QQQ / Nasdaq / Tech sector
Top right- XLF / Financial sector
Bottom right- Dollar index .
XLFDaily Chart Report
XLF gapped down below support and failed to capture the support back. Since banks earnings season has started usually banks tend to drop after earnings. So we could see XLF retrace back to $40 gap support level next week. Also there has been plenty of put buying on the bank stocks and XLF going out to Feb exp.
MMs are doing everyone dirtyThey bull trapped the S&P just a week ago and now they're doing it with XLF
so dirty...
XLF SHORT HIGH RISK TRADE @ 41.52Shorted small shares 41.80 huge resistance
daily stoch trying to roll over, and indecision candle
More selling then buying, but we have earnings
my side I have for me that resistance vol and TNX dropping
qqq like low rates banks don't.
XLF STAYING SHORT 41.18 High risk This is high risk trade its a long. With TNX at 1.77 well that does do well last time it dropped xlf when rates that high. So I went shrt.
www.screencast.com see it running into resistance
$XLF continuation play$XLF displaying good relative strength last few sessions with a break out of trendline resistance and good reaction off the 9ema daily retest/resistance turned support confluence. CPI numbers Wednesday and bank earnings starting Friday with $JPM, $C, $WFC followed by $BAC, $MS, $GS among others the week after. Continuation play, calls above 41.3 PT 41.7, 42, 42.3, 42.6. Can play individual tickers too.
$XLF LevelsBreakout zones:
$41.2
$41.09
Bull PTs:
$41.41
$41.77
$41.98
Bear PTs
$40.75
$40.52
$40.28
$40.05
Interest Rates - Inflection Point?As interest rates rise, it would typically be a positive for $XLF. Yet here we see the Financial sector XLF trailing against SPY and reaching an important resistance point (SPY itself is also stalling against other defensives). Keep an eye on this one for clues as to market rate expectations.
XLFRise in interest rate is doing well for financials. XLF finally broke out today. The price target is now 42.03. Look for a potential retest of the breakout.
Simple New Max StrategyXLF is making new max today. There is an oportunity to take a long position today. In the next days the price should validate the new support, there we will have a second buy oportunity.
Back to basics strategy...
XLFXLF sitting at the door to breakout. A brake above 40.89 can easily take the price to 42. There has been multiple unusual options activity for Feb exp.
XLFThe Financial Select Sector SPDR Fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Financial Select Sector Index. The Index seeks to provide an effective representation of the financial sector of the S&P 500 Index Seeks to provide precise exposure to companies in the diversified financial services; insurance; banks; capital markets; mortgage real estate investment trusts (REITs); consumer finance; and thrifts and mortgage finance industries Allows investors to take strategic or tactical positions at a more targeted level than traditional style based investing
Strong strong breakout for XLFAs I mentioned in a previous post, TNX yield should continue rising this 2022 as economy recovers.
That will be very good for banks.
39 should be a strong support.
Target price will be the height of previous descending triangle/c is around 45.
XLF STAYING SHORT @ 39.50Lets look daily stoch starting roll over look at the vol more selling buying. Having problems at the 50 day I shorted into it.
Lets look at the weekly rolling over and we have lower highs
Staying short XLF @ 39.50.Lets look at daily stoch. Rolling over and we hit 50 day MA twice and failed break out Look and we broke 100 day MA not 1 but 2 times. Look vol buying vs selling lot more red.
Know the key is also TNX it is dropping .
Know lets look weekly stoch its rolling over meaning trend is down. Know u now these crooks see how we open ,they will try defend 100 day 38.70.
My target is 37.54 test lows. Have trailing stop in place
Wedge up for xlf recently the banks have pretty much sold off which is expected while the S&P lingers at the top... usually when the large indice is up and down creating and compleating H&S formations into other formations we catch a wedge up. now brk.b latest movement to ath was created by movement in coca cola. so largest holdings are bac brk b well Fargo black rock etc.... large bank holdings. if these guys even move back to support here from $39.58 closer to $40 Monday morning were looking at putting the $42 call in the money by end of December and the $43 call for January 21st is on .5 now with a quick move up can print these bad boys to .35 + easily. I know inflation is bad for banks for is fed not force feeding the banks' bad? Also, if you're not bullish look at the last time we got a solid trend bounce on the yearly and just imagine the ideas of a bull.
