Financials / XLF / FAS / FAZ

Tuesday (Sept. 10th ) this week I closed the XLF Sept. $20 calls, which was perfect timing

Yesterday I updated Financials in this post and had said the following in the first two paragraphs:

"Financials look like a decent short, I kind of prefer the 3x short Financials ETF, FAZ right now.

Just like the head fake is a concept that we have learned about through 3C and paying attention to the market, understanding why it's important; the "Reversal Process" is a concept as well and this is where I have a little trouble committing to Financial shorts at least in XLF right now."

I don't know if anyone entered a Financial short like XLF short or PUTs or FAZ long, but Financials are leaking lower today so I want to get an update out for those of you who may have taken a position.

If you are in Financials short now, I think that's great, they should roughly follow signals for the general market so for instance if I were to close out the IWM puts, it would likely be a close out of XLF puts, the FAZ long, since it has less leverage as a long ETF position can probably be played a few different ways including holding it, but we'll cross that bridge when we get there.

Thuis far the market is moving as yesterday's analysis suggested.

 Above is a very strong Wolf on Wall Street Concept, when a market is in a flat range, often tight, a lot of traders assume nothing is going on unless there's a breakout and then they chase it when it's too late.

I often say, "A quiet market is like the kids ion the room next door being a little too quiet". For those of you who are parents, you probably know what I mean, when things are too quiet, usually something is happening and it's the same way in stocks and the quiet range also lulls traders in to a sense of complacency. However, after a preceding uptrend, a flat range like this that is proportional to the preceding trend is more often than not, distribution.

A flat range that is proportional to the preceding down trend is more often than not, accumulation so in running scans, look for stocks that are flat and not moving much rather than ones that are trending in an extreme;y vertical trend, those are just about used up most of the time.

 There's a VERY clear trend among the 3C charts for XLF, you can't miss it, this gap up has been used for heavy distribution.

This is a 5 min chart of XLF.

I did not open a new position because I wanted to stay flatter than normal in options positions until this market starts to give very clear signals, but if I were avle to get a pullback in FAZ, I would enter the position or the options if they looked like a strong entry so I will be setting price alerts to let me know when Financials are in range of a good entry, starting with FAZ <$29

 Notice anything special about the 10 min chart? Nearly EVERY timeframe is leading negative to intense new lows.

As I was saying earlier, some CORE SHORTS will set up before the overall market has clearly set up and I'm not afraid to enter those before the market is in the same place, often we only get 1 or two chances to get this position.

 The 15 min chart shows that the damage hasn't reached this stronger signal quite like it has the others, thus I believe I'll have a chance to enter at favorable terms if I'm patient and alert.

This is FAZ, the 3x leveraged Financial short on a 10 min chart, I'm looking for a pullback here and I may indeed add to FAZ or open XLF puts.

In either case what we are seeing is the market using price strength in almost a panicky fashion to sell or sell short, they want out and want out now. As always, the better the 3C signals, the higher the probability of a successful position, I'd encourage you not to get greedy (in this case, "I'm going to moss the move!") and rather be patient and find the best place for your funds, that would be as the longer charts like XLF 15 min start to look like the 1-10 min chars. 

EITHER WAY, THERE'S BIG TROUBLE IN FINANCIALS WHICH MEANS THERE'S GOING TO BE SIMILAR TROUBLE IN THE FINANCIAL HEAVY SPX