Financials

I still think Financials are key here in the near term. As you know, I consider the 3 main risk groups essential to sustaining a move higher to be Financials, Energy and Tech.

As of Friday we were already seeing the cracks in Energy and Tech and the start of cracks in Financials, but even from a momentum/price perspective, Financials were holding up better than the other two groups. So while I want to keep an eye on the other two as well, it's Financials that I'm most concentrated on right now.

 Energy's 5 min chart  (5 min is where we start moving away from intraday timeframes and in to more important signals) with a leading negative divergence that looks even better on this morning's action.

 Tech in a similar position.

 Here is XLF (Financials) just breaking above a major resistance level this morning, it saw some action above on Friday on an intraday basis, but couldn't hold the close there.

 Here's the same longer term resistance level broken this a.m. in red and a local level in orange.

As far as Financials longer term, more important strategic underlying trade...

 The 15 min chart which is the start of the very important underlying trend timeframes with a leading negative divergence and 2 areas of somewhat parabolic price moves, you know how I feel about parabolic moves, they are inherently unstable.

 The even longer and more important 30 min chart showing a worsening leading (now) negative divergence which is along the lines of many of the market averages we have seen at these last two parallelogram (large bear flag) reaction highs).

 And the 60 min chart-again, the last two major reaction highs in the pattern have seen significant deterioration, this move from Friday/today is in the deepest leading negative position or worst divergence on the chart. Now it's just time to go from the longer term strategic view to the shorter term tactical (timing) view.

The 1 min chart over the last several days and this a.m., note the late day positive divergence on an intraday timeframe from Friday and the relative negative divergences on this morning's move.

We want to watch for the divergence to worsen and migrate to the longer intraday timeframes.