XLF Paints a Picture

XLF is an ETF for financials and the S&P has the heaviest exposure to financials at last check. Because we saw a positive divergence and estimated gains today, does not mean that we are forecasting further along then today. Today is Friday and many traders in this global upheaval will reduce risk over an unknown weekend, especially at the pace events are unfolding. So I looked at XLF to get a feel for the internals of the S&P, here's what I saw...

 XLF is up nicely today, over 1.5%. You can see as of yesterday on this 5 min chart we had a very strong positive divergence at 2 p.m., however the 1.5% limit seems to be a zone of resistance as XLF hasn't done much since this a.m. The red arrow shows a 5 min negative divergence so I expect we may lose some of that 1,5% gain later today.

The 1 min chart shows ZERO confirmation today in XLF and is in fact negatively divergent. considering the lateral movement in price, I assume that we are seeing some distribution into the day's gains.

This is but one aspect of the S&P, but it takes many pieces of the puzzle to put together a picture and this is certainly  key piece. I'l keep looking.

As a preview of tonight's risk management article, some of the recommendations I'd consider are de leveraging long positions, having cash on hand, get your toes wet in some high probability, low risk short set ups or at least have that exposure, you don't have to swing for the fences, but you want to be able to offset the high long side correlation. Personally I consider today an excellent day to add some short exposure on the cheap with less risk. Of course some of my favorites ETFs have been EDZ, FXP and SRS is showing a little spirit lately and FAZ. I also prefer to have straight line shorts like MCD, TGT, etc as there are risks and rewards to each, a blend and solid understanding of the risks of ETFs is crucial. Any questions can be emailed to me. There are plenty of ideas on the February list, not the Speculative list, the regular one.