Tuesday I updated Financials, the general premise based on the charts was that financials would pullback (with the market for the most part as it too is giving similar signals and correlation is running very high between sectors, or at least higher than usual) which would be a constructive pullback and likely see positive divergences and then the sub-intermediate uptrend would continue, likely triggering a real short squeeze, not just the hints of a short squeeze we have seen recently.
This also made FAZ (3x leveraged Bear Financials ETF) an interesting short term long trade so long as you can pay attention to the market and are nimble to move in and out quickly (which has been the overall theme for the market the last several months).
As of today, here's what the charts are looking like...
Another bear trap in Financials, this time from a large bear flag.
The expectation for a move down in financials from Tuesday has been thus far fulfilled today. As the market bounced intraday off the 1 min positive divergence, Financials failed to participate, instead they just consolidated sideways
XLF/Financials 1 min negative from earlier in the week and a leading negative as they consolidated today.
2 min negative-
3 min negative
And 5 min leading negative so we have good confirmation of a pullback. I would not consider going long financials until we start to see positive divergences within a pullback, as the move is fairly new I would not expect to see that yet.
The XLF 60 min chart is positive and this suggests that after a pullback Financials will continue higher in the sub-intermediate move up, again likely triggering a strong short squeeze.
FAZ (3x leveraged Short/Bear Financials) is looking good intraday with a leading positive divergence in to the consolidation.
FAZ 15 min leading positive looks like it has more upside as Financials pullback.
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