XLF Charts (Financials)

There are some intraday 1 min charts that aren't in line or where I'd expect them, it's the same way in the averages at last check, but with the odd morning/afternoon signals and price movement, it has been fairly typical for the intraday low to be accumulated and then sold in to the afternoon, if we are going to get a bounce, I'd say the difference would be that the intraday low is still accumulated, we just don't see the afternoon negative signals.

First I'm going to give you the big picture perspective so you can sort of put a "bounce" in context next to the big picture and draw your own conclusions regarding risk on ANY long positions/Calls (in my view the risk is extremely elevated and the market becomes less and less predictable with increasing volatility).

 The daily chart, like many other averages yesterday, did put in a bullish reversal closing candlestick with a hammer here, not perfect, but good enough to be valid.

I can't say what kind of top may be forming or in place in XLF, but it looks like a right angle broadening top which is what ALL H&S tops start out as, not all become H&S, some stay as broadening tops.

The important thing no matter what kind of top it is, would be my custom cumulative volume indicator I added in blue over price.

In a H&S top it is critical that the left side of the head (the rally side) see decreasing volume on that move as we have here.

*** VOLUME ANALYSIS IS WHERE MOST TRADERS GO WRONG IN TRYING TO IDENTIFY AN H&S TOP AS THEY GO BY PRICE PATTERNS ALONE AND VOLUME IS ESSENTIAL TO IDENTIFICATION.

 This is the De-Mark-ish Custom Indicator on a long term Monthly basis, which provides much less noise and a much stronger signal. The 2007 top had a cluster of sell signals just as the market has seen a recent cluster of Hindenburg Omens, which give a stronger signal in clusters.

The green buy signals came at the 2009 lows and for the first time since then we have the first sell signal right now.

The green arrow is simply pointing out a buy signal in 2008 that led to a month long rally which is not easily evident on this chart.

The daily 3C chart with the 2007 top/distribution, clear 2009 lows accumulation and strong recent 2013 distribution.

This distribution signal through 2013 may seem long, but this is an extreme market, we already know that market breadth fell apart horribly through all of 2013 and that only happens with prices falling apart and crossing below their respective 40 and 200 bar moving averages.

We also know that several large private equity firms have been selling "Everything not nailed down" for 15 months. So the length of the signal which is abnormally long, in my view is not an error, but rather a hint as to how bad the distribution has been and therefore how bad the proceeding market decline will likely be (which is now at historic 100 year extremes in many cases of historic top studies I have done and posted here.).

 The 4 hour chart  is clearly where we'd like to see it as far as the bigger picture goes.

As is the 30 min chart which I include to mark a delineation between 15 min and 30 min charts.

Now coming at Financials from the short end out...

 This shows the afternoon negative divergences and early price action to the downside which is typically accumulated at the intraday lows as can be seen yesterday.

This chart doesn't look right to me for timing an intraday entry, but neither do the market averages at last look, I will look again before I decide whether to enter any positions.

 The 2 min chart is showing the first significant accumulation since the pullback we were looking for last week,

The 5 min chart also shows a significant positive divergence and what will be interpreted by many technical traders as a bull flag in yellow.

 The 10 min chart's overall trend from distribution to accumulation makes Financials look like they are ready to go.

Finally the 15 min chart, please compare to the 30 min chart as the 15 min is no where near as positive as the 10 min so it's almost a transition point, the 30 min is clearly negative and a much more powerful signal.