XLF
Three weekly Pinbar patterns inside a weekly PRZXLK just completed its 3rd weekly Pinbar pattern inside the PRZ of the bearish Bat I've mentioned in my previous analysis.
Although there are no clear signs of weakness yet... and we are in the summer...this still should be considered as a warning signal for the bulls
and opportunity for bears.
XLF megaphone top to be completed.I believe right now we are in the 3rd of the 5th. There is still a bit to run for this ticker. Sell overshot double top in the coming weeks.
XLF looking like a good long position here as a short bond proxyIf you expect an uptick in inflation like I do in the US, the Financials could be a good way to play this.
With USD down more than 10% this year, commodities having risen by more, and continued labour market tightness, inflation could surprise to the upside over the next few months and $XLF could be the proxy to play this, rather than being short bonds - which is something I don't like to do due to the negative carry. This trade could also complement a long position in USD/JPY.
European banks turn up as US 30 year treasury bonds fallBanks do better in a high interest rate environment. The US central bank is going to be reducing its balance sheet by selling US bonds. As the yield curve steepens, interest rates rise. If reflation holds (DXY falls, interests rates rise AND it doesn't crash the market), banks could do very well. Watch for upward resistance here. The european banks are up today. To see the intraday STOXX 600 banking prices, go to STOXXdotcom and search sx7p. See the links to the relevant etfs for trading options.
I am only short USB10yUSD via TWO right now. Note the chart shows 1/USB30yUSD, the inverse of the bond price (yield is also inverse to the bond price).
important for the whole marketXLF touching the 63 quaterly VWMA
at first it was rejected but the candle doesnt look nice
XLF potential bearish engulfing pattern forming.The XLF was off to the races this morning as the longer-dated maturities of the yield curve sold off, increasing the spread captured by banks who borrow-short and lend-long. In the middle of the day a key reversal occurred, setting us up for a bearish engulfing candle. This chart pattern is a rally above the previous day's high and a close below the previous day's low, and has a high probability of follow-through selling.
XLF shows negative divergence with bearish wedge Here the XLF daily chart: with a negative divergence and a bearish wedge we are on the apex of a potential negative drop. A break of the bearish wedge will be a problem for the bulls
Citigroup (C) still has a ways to runI'm simply posting this chart as a reminder how far Citigroup (C) has fallen since its 2008 highs. Rising long rates will benefit the banking sector as banks borrow short and lend long, keeping the spread. Even though the stock has doubled off the lows, it's still priced at 1.0x book (cheapest in the sector, JPM is 1.7x book) and Barron's thinks the shares could appreciate another 50%: www.barrons.com
Short FinancialsChart is fairly self explanatory. Target on the HVF has been met and price action now looking toppy with dollar collapsing. Financials need to retrace to 23.5 at the very least, although would expect more depending on rate hike narrative
Interesting areas of disconnectNote the complete disconnect between DXY and the run up in financials as of late. UJ performance is marginal and XAUUSD has been acting bearish. Would lead me to infer that DXY troubles are not related to FOMC forecasts and instead more euro-based. This would support the notion that XAUUSD is setting up to take a dive lower as a correction.
Secondary interesting note is that the XLF finished it's big move last november almost 5 days prior to all currency pairs and metals.
Testing a weekly resistance zone before earningsWFC is testing the top of a consolidation range before earnings.
WFC has been consolidating since it broke below a weekly uptrend line.
Bearish? Short as long as below 60$
Bullish? Buy the breakout?
The Financial SectorThe Financial Sector
The following ETFs are related to the Financial Sector. The ETFs track different sections of the financial sector as noted. There are many more ETFs in financial subsections for the USA and international equities. Included for each ETF are the symbol, the total Assets Under Management (AUM), the Number of Shares in circulation (Shares), the Average daily Trading Volume (Avg Volume) for the 3 months prior to 7/12/2017, the Expense Ratio, and the Bull//Bull type as well as the leverage ratio.
I have tried to copy these data carefully but cannot be held responsible for any mistakes made. These data are important because high volume ETFs are liquid which means you can get in and out quickly and there is a smaller spread between the bid and ask price. This affects the actual profitability of the entry and exits trades. The same considerations applies to put and call options. Use the highest volume ETF that you can.
The risk of the 2x and 3x Leveraged ETFs is that the 2x or 3x ration only applies to one trading day. After that, the ratio declines daily due to the rebalancing effect. NEVER hold 2x or 3x ETFs long term as they fall in value over time. For long shorts (in a non margin account or 401k), just buy the 1x Bear ETF. Unfortunately FAZZ is very low volume.
XLF AUM 25.2 Billion, Shares 1,006 M, Avg Volume 73.9 M, Expense Ratio 0.14%, 1x Bull
Broad sector exposure.
VFH AUM 6.0 Billion, Shares 94.7 M, Avg Volume 0.8 M, Expense Ratio 0.10%, 1x Bull
***Note VFH tracks the MSCI US Investable Market Financials 25/50 Index
IYF AUM 1.8 Billion, Shares 16.4 M, Avg Volume 377,765, Expense Ratio 0.44%, 1x Bull
***Note IYF tracks the Dow Jones U.S. Financials Index
UYG AUM 847 Million, Shares 8.0 Million, Avg Volume 46,208, Expense Ratio, 0.95%, 2x Bull Leveraged
***Note UYG tracks the Dow Jones U.S. Financials Index
FAS AUM 1.4 Billion, Shares 29.3 M, Avg Volume 2.7 M , Expense Ratio 1.05%, 3x Bull Leveraged
***Note FAS tracks the Russell 1000 Financial Services Index
FAZ AUM 197 Million, Shares 12 M, Avg Volume 1.7 M, Expense Ratio 1.1%, 3x Bear Leveraged
***Note FAZ tracks the Russell 1000 Financial Services Index
SKF AUM 43.7 Million, Shares 1.7 Million, Avg Volume 38,138, Expense Ratio, 0.95%, 2x Bull Leveraged
***Note UYG tracks the Dow Jones U.S. Financials Index
FINZ AUM 173.0 Million, Shares 0.1 Million, Avg Volume 1,766, Expense Ratio 0.95%, 3x Bear Leveraged
***Note UYG tracks the Dow Jones U.S. Financials Index
FINU AUM 27.1 Million, Shares 0.4 Million, Avg Volume 10,327, Expense Ratio, 0.95%, 3x Bull Leveraged
***Note UYG tracks the Dow Jones U.S. Financials Index
FAZZ AUM 1.7 Million, Shares 0.1 M, Avg Volume 310, Expense Ratio 0.58%, 1x Bear
***Note FAZ tracks the Financial Select Sector Index VERY LOW VOLUME
I put these here for your and my convenience so we can use the elf which fits our needs best. If you know of a higher volume 1x bear etc for this sector, let me know.
For premarket US traders, you can go to STOXXdotcom in the morning and look up symbol SX7P (STOXX® Europe 600 Banks) as a leading indicator of how US banks will be doing.
$BLK Long$BLK closed at a 52 week high on Monday. Financials have shown strength/seen a lot of sector rotation in the past week. RSI Perking back up after some sideways consolidation. Looking to go long with a pullback to the $427 area; stop with a close below ~$424.39. On my watch list for 7/5.
Financials about to complete a second bearish harmonic patternNotice the Sell Zone shown in this chart
The financial sector is forming a a descending triangle.This is usually a bearish pattern. The big trade is to wait for a breakout to either side. A short position can be opened here with a stop loss above the descending line. I will open a long position in FAZ (3x Financial Bear) at the market open this AM.
XLF surges on house vote, but don't buy into the move.XLF, the financial services ETF, surged as the House voted to repeal Dodd-Frank. However, financials are staring a wall of delinquencies in the face as the delinquency rate continues to rise higher. This will have a bigger effect on the market than passing this legislation. The delinquency rate continues to rise after the surge in lending at the end of 2016.
I am looking to short XLF. The economy is not as robust as most participants wearing blinders want to believe. Given this, XLF is a short at these levels. There will be more data coming through that iterates where the economy truly is.
XLF surges on House vote repeal Dodd-Frank, but don't buy.Dodd-Frank got closer to being repealed and likely the Senate will follow suit, from what I he been reading. However, the financial sector is facing a wall of delinquencies as the rate continues to climb. That would be a far greater market mover than the repeal of the legislation that would ultimately prevent financials from getting a wall of delinquencies. It is kind of ironic, if you think about it.
I am more interested in selling financials and this may be good starting point to enter a short. The financials are facing dire times ahead. This is a short-term boost that allows a short seller a better vantage to sell.
