XLF / Financials

Last week I mentioned I saw better underlying strength in Financials than other groups like Tech, today I quickly looked at XLF and the inverse and leveraged ETFs like FAS, FAZ, UYG and SKF to get confirmation.

There's ZERO doubt in my mind that I  want my core position in financials to be short, for the first leg down in the market, the first serious leg down, I want to be full size FAZ (3x short Financials ) and I'll be looking for that opening. 

However very short term, not much has changed since last night's Index futures except they grew more positive this morning. I still think it's very high probability the market tries to bounce from this area, I can't say how much strength it will have so if you can't move quick, I'd much rather trade from the high probability side like long FAZ (short Financials) and let that sit for a month or two, other than that, if you can trade in and out, I think a quick long financials makes sense to look for a better opening in short financials (FAZ).

 XLF intraday 1 m

XLF intraday 3 min with the same alligator mouth divergence.

 XLF 5 min, the same divergence

XLF 15 with that same "Alligator mouth" divergence".

 As far as highest probabilities, this is the 60 min XLF chart so I don't want to be hanging around here with a long position for very long at all.

 This is FAS (3x long Financials) with the same alligator mouth divergence.

This is a 60 min FAZ chart (3x short Financials), that's one of the best looking bottoms with a leading positive divergence I've seen, longer term this is where I want to be and will be looking for any strength to get in there.