Financials Update

If you missed the earlier post on Financials today you might want to reference it .

There's something I call, "Getting lost in the lines" which basically means you are looking at something so closely that you miss the bigger picture, it's also known as being "Myopic".

I don't want to nickel and dime a position in Financials (short) to death, I do want to see the best signals with the highest probability and that's what this is about. If I have to chose a position long or short Financials right now and can't touch it for 2 weeks, I take the short side, but my purpose is to give you an edge, not a gambler's best guess.

Financials-XLF

 The long term-"Big Picture" 60 min chart shows Financials being heavily distributed in to the 11/16 rally. This means the uptrend has very little institutional support, it's likely that institutional money is short financials and that the real trend that should make the most money is going to be down.

 Financials at a closer look-although we can see what we see above, that doesn't guarantee a successful trade without a good entry, trade management and exit, that's the purpose of these charts. XLF was in a flat range of 12 cents while it saw a leading positive divergence, not huge, but strong enough to take financials on a breakout above the 2012 resistance level right after, that was the point. Once we get that breakout we are looking for distribution and we see the 5 min chart as shown earlier, giving us that signal.

 Intraday today, the 3 min chart is in line, it's not giving us an edge right now, but rather saying the current intraday trend has nothing stopping it so higher prices intraday are possible.

FAS (3x Bull Financials)

 The 15 min chart here, like XLF is also in a negative divergence since the break above resistance, that's good for the trade shaping up, but it doesn't give us the tactical entry.

 Again the 3 min chart, just like financials is in line, there's no short term edge in making an entry right here and now.

FAZ (3X Bear Financials)-

 This is the ETF I'd like to enter/add to at the right time, the 15 min chart is leading positive as it should be as it is the opposite of XLF and FAS above.

However the 3 min intraday chart is leading negative a bit suggesting lower prices are the highest probability intraday today, I want to enter at the lowest price possible in FAZ while having excellent 3C signals.

The one thing to think about is "What does the market do Monday?" after a long weekend of a lot of talk. Financials could plunge with the entire market so I'm hoping we get a great signal before the close, but you may want to look at the first chart, the big picture and consider whether you want some exposure to Financials short here just in case.

No one knew for sure what would happen last night in ES after the vote, so along the same lines, we don't know what will happen over the weekend, but the bigger picture has a solidly negative bias.