Financials Pullback-FAZ Trade

If I did trade FAZ here, it would be with the understanding that this is a quick trade, you have to be nimble especially with a 3x leveraged ETF. If Financials pullback which they look set to do (the market is VERY correlated), then FAZ (3X short financials) should see some decent upside pretty quick, but again, expecting a pullback in financials means that FAZ long trade would be pretty short and you'd need to be able to watch it closely.

The charts...

 First on the daily Financials/XLF chart, there are at least 4 major head fake moves here. Take a look, see if you see them and why they are head fake moves and how they influenced trade in financials.

 On a 15 min chart we have a decent gap from Friday and that looks to me to be where the market likely needs to do some backing and filling (pullback).

 The 5 min chart, notice how flat trade is over the last 2 days, flat trade is where we often see divergences, it catches people off guard as the flat trade is not exciting and people aren't paying attention, but that' not the reason for the divergences, the reason tends to be stable prices; just think about why VWAPs are used to gauge the quality of a fill of an institutional order.

 Financials 1 min 3C shows several divergences, both negative and positive, the most recent is a leading negative divergence as Financials popped Friday, it appears that pop as being sold in to near term.

 The 2 min chart is seeing the weakness of the 1 min chart migrate to the longer timeframe.

 The 3 min chart is a good example of a relative negative divergence (relative between 2 points) and then a stronger leading negative divergence.

 If XLF is negative on the 3 min chart (again this is not a hugely important timeframe, it is along the lines of a pullback), then we'd expect to see a positive leading divergence in the mirror opposite ETF, FAZ (3x leveraged short financials) and there it is, this is part of confirmation.

FAZ is even seeing a 5 min leading positive divergence develop. It looks like Financials will pullback and fill their gap and FAZ will likely mov up to fill its gap, although moves in the market have ben getting more volatile recently so we might see more than just a gap fill.