Financials

Friday I started opening partial position in leveraged long, I passed on Financials as I didn't think they were there yet, not even for a partial position, but that seems to be changing and I may start looking at adding part of a position (phasing in) in something like FAS (3x Bull Financials). As expected last week, rotation has begun, but it recently has been short lived, Tech is outperforming Financials today, however this relative weakness in Financials may indeed just be offering the opportunity to add the position on price weakness and building underlying strength which just wasn't there Friday (the reason I passed on Financials Friday).

First we'll look at XLF (Financials) and then an A/B comparison of FAS (3x Bull Financials) vs FAZ (3x Bear Financials). XLF and FAS should have similar signals, FAZ should be exactly the opposite for confirmation.

 The one op-ex pin Friday that came in just about on schedule was XLF at $16, which I pointed out would be right at the triangle's apex, basically the point of no opinion on a triangle that is a sign of a highly directional breakout.

 Intraday there's a bearish consolidation/continuation pattern in XLF/Financials with a descending triangle, this implies to Technical traders that the preceding down trend will continue (the pattern size is relative to the trend on the same timeframe), volume is confirming the price pattern as well. I would expect a break lower from this pattern and since capturing the chart, it has broken lower, now we look for the head fake move and perhaps a lower priced entry with less risk to begin phasing in to a FAS position.

 XLF 1 min positive divergence developing.

 3 min XLF positive divergence

 XLF 5 min leading positive just starting to develop-this was NOT there Friday.

 XLF 10 min in leading negative position, but making progress today.

FAS vs. FAZ

 FAS 1 min leading positive today

 FAZ 1 min leading negative today.

 FAS 2 min positive today and Friday

 FAZ 2 min negative today and Friday

 FAS is just starting to see a 10 min positive divergence, this is what I want to see and see develop a bit more before committing too much.

FAZ is showing the opposite 10 min leading negative divergence just starting.

We have excellent confirmation in XLF, FAS and FAZ, a long position in FAS (phased entry and speculative size) is starting to look better, Friday is had no appeal at all.