The story is pretty much the same, for short term (as in days which leveraged ETFs are perfect tools for), the trade looks to be to the upside and thus FAS (3x Long Financials) would be my choice as XLF on its own doesn't offer enough profit potential. Bigger picture which is coming together very quickly (i.e.-AAPL) I want to be using short term price strength to get in to short positions at better entries (almost all of the core shorts were entered at swings to new market highs before they fell much lower) with lower risk.
Financials showing numerous bearish candles with higher than normal volume acting as downside reversals and bullish reversal candles with higher than normal volume acting as upside reversal candles. This daily candle today which is a doji, is a nice bullish reversal candle, although the volume could be higher, Financials have shown better relative strength today than the broad market.
On a 5 day chart, this shows several concepts, first the ascending (or descending) wedges and how they don't work anymore like they are suppose to according to Technical Analysis, instead of this wedge breaking to the downside and retracing the base as it reached the apex, it did what all wedges have done the last year+, it formed a lateral top (bullish wedges form lateral bases), then they tend to break in the direction they are supposed to.
Using the candlestick reversal concept on a 5 day chart works well too, here you see the October 2011 lows that we rallied from with a signal and a recent pair of shooting star bearish reversals on volume.
I'll have more to say about companies hoarding cash, Financials and QE3 later.
The 10 min intraday chart of FAS (3x long Financials), is positive, but didn't really inspire me as a choice until later today.
The 3 min chart is leading positive, when a longer term (like the 10 min) divergence is already in place and then the intraday short term charts fire off like this, it is usually the market makers/specialists who have been filling orders over the last few days and who know which way smart money is going based on those orders they filled. Therefore, right before a move, the middle men tend to stock up and we see this divergence scenario.
FAZ which is the 3X Bear/short Financials) on a 60 min long term chart is very positive, which is very bad for financials, I wouldn't really expect to see that in something like FAZ, but XLF confirms it, which means the bigger picture looks very bearish.
XLF on a 4 hour chart with (left to right) upside confirmation then a negative divergence early 2012 where we entered core shorts followed by downside confirmation and then the June lows positive divergence which was large and what I suspected all the while was those shares that were accumulated, being sold in to price strength as well as shorted toward the end as the 4 hour is at the worst leading negative of the year, in fact the worst I can see in 5000 bars of history going at least back to Oct 2011.
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