FAZ Calls Up 32%

On Thursday I was feeling a bit tech heavy, you may recall the 3C comparison between Financials (XLF) and the 1x , 2x and 3x short (inverse) and long financials we looked at, all 6 charts were confirming each other. Thursday I went with some FAZ May 21 calls, it's not even been 1 market day and they are up over 32% thus far.

Here's what they are looking like now.

 As is now common practice with both bullish descending wedges like this one and bearish ascending wedges like we've seen in some of the market averages, the old school Technical Analysis rules no longer apply, which would expect an upside breakout from FAZ after it reached the apex of the descending wedge. Sometimes we do see a head fake move up, but almost all of the time we see a lateral consolidation (in this case it looks very much like a base) before any upside movement.

 On a daily, FAZ is nearing first resistance and there's a stronger level near $24. I'm planning on holding FAZ for the time unless something changes, but suspect I'll let the position go as we approach the next resistance level and look for a pullback to reposition, this of course depends on how quickly events unfold as there is a time decay component, even though these are out to May.

 Here's the short term 1 min positive divergence and this is the confirmation of the move up this a.m. that we had not seen in any of the market moves up recently.

 This looks to be an accumulation period, note the small negative divergence as FAZ moves up a little too far out of the accumulation zone.

And here's the 60 min chart with a nice leading positive divergence. So I'll try to hold these as long as possible unless I see signs of a strong pullback coming, but for now the plan is to try to get the most out of the position and I'd expect some pullback before FAZ tries to take on resistance near the $24 area.