Trade Idea: Financials

This, like all of the others, can be looked at a couple of ways, depending on how aggressive you are about the trade.

First the position I'm watching and considering is FAS (3x long financials), this is for a short duration trade, any positions in FAZ (3x short Financials) that are in the core portfolio would just stay as they are and perhaps if there's room I'd add to FAZ upon certain conditions.

First I want to give you the overall feel or the "Highest Probabilities" because this sector has been destroyed.

I'll start with XLF which is the non leveraged ETF for Financials...

 10 min XLF

15 min XLF

30 min XLF through the 10/9 cycle

4 hour XLF, clearly the probabilities are to the downside in financials so for larger/longer duration positions I prefer a Financial short, XLF short or FAZ long.

Short duration FAS (3x long Financials) for a bounce...

 Yesterday again we can clearly see where the divergence started and where it failed. We are getting a sort of inverse H&S look to the price pattern, although I can't say that is what it is because the failure was pretty obvious.

FAS 3 min, so we are not there yet.

Looking at it's opposite, FAZ...

 1 min so it looks like a pullback of short duration is probable making FAS long a play on that pullback.

And as far as FAZ goes, even for the trading portfolio, I look forward to re-entering the position as this 10 min chart makes clear, this is where the probabilities are.

For an aggressive trader you can try to ride FAS on a bounce, as it ends jump in to FAZ long for the next leg down.

A less aggressive trader can just wait for price to pullback in FAZ (hopefully) and enter it there.

The least aggressive trader who may be holding FAZ, I'd have no problem just holding it, you'll likely see some short duration drawdown, but things should resume right back on the upside as this possible correction ends. So, 3 different ways to play this not including options.

Remember if you have exposure to FAS long you may want to be careful about too much exposure to SPY long as well, about 22% of the SPX is financials.