XLF Add-To / New Position

Yesterday I explained in this late day Financials post that there was only 1 place I'd consider XLF Calls/long or FAS (3x long Financial ETF) and that was right on the break of the bear flag where I'd expect volume to pick up. It's very early in the day so we don't have a lot of timeframes caught up for great confirmation, but I think the risk here is manageable. Most XLF stops are going to be at $19.93-$19.94 with another layer <$19.90 so I'd place my stop below those levels, the fewer shares you take on, the wider the stop can be, the more shares you take on, the tighter the stop is the general risk management basics of position sizing. You could of course go with a phased position, especially if using FAS rather than options which could be added to on a break above the bear flag as that would be likely to create an upside "snow ball" event as shorts are squeezed and longs come in.

 The Bear flag I showed yesterday in XLF and the break below which is the area I defined as a possible buy area late yesterday in the post linked above.

 Volume swells this morning as stops placed below support of the flag are hit and limits triggered, shorts enter as this is the move they expect from a bear flag.

So far the early timeframes that are up to date are positive, but the more stable, longer timeframes still need some time (maybe an hour) to have caught up for the new day.

FAS also showing the same positive on the move this morning.

So far it looks like a head fake move, more timeframes reporting in would give more confidence, but if you are interested, you may not have the time to wait for them, I personally already have exposure and for an add-to, I'll wait for indisputable high probabilities before adding risk.

For FAS traders, a partial entry can be made here with a add-to at a breakout above the flag (ON VOLUME) to show the shorts are covering, this should be around the $20.25 area, although you may see some initial covering at $20.15.

If I decide to add, I'll let you know.

Remember that there's not a whole lot of risk, but you don't want stops at obvious levels like $20 or $19.95, etc.