Trade-IDea/Trade-Set-up (Swing+) COF

While I suspect financials are going to be a longer term trade, especially with new, stricter capital requirements coming in to effect soon as well as their huge lack of quality collateral (thank you F_E_D). Personally I tend to prefer something more generic like FAZ for a Financial short position as it lessens impact of stock specific news/events, but there are advantages to being short an actual equity rather than being short via going long an inverse ETF, for some of those advantages, here's an article I wrote on the subject some time ago, Making More Than 100% on a Short. Remember, if you are short and they have a dividend, you are responsible for the dividend if it goes ex-divy while you're still short, however that's usually not a large concern for me (COF's div yield is 1.47% per year).

As for COF, right now I view it more as a swing trade set up (I suppose it could be entered here and now, but I prefer a little bounce to enter. I'd take it from there and see if the market gives more , if it does, I'd widen out my stops and maybe transition to a position trade.

 This trendline on the daily chart was drawn months ago, it was an expectation for COF to move above a clear resistance area with alerts set for that move and then just keeping an eye on it in the watchlist. I do like the failure of the August cycle to make an equal or higher high.


 As a swing trade, this one trends pretty well, the Daily Trend Channel captures significant portions of each swing trend, the two red arrows are where each of the 2 previous moves to the upside were stopped out on a closing basis and now it looks like a swing short is a pretty decent looking opportunity with the possibility of more.

The X-over Screen shows the most recent signal (sell/short) , I think  you could pick this up here and now as a swing short, but I'd prefer to see a bounce above the 20-bar (60 min) moving average in blue as an entry, so long as RSI stays under 50 and the 10 bar stays below the 22 bar (yellow/blue respectively. 

I use a third custom indicator for confirmation in the middle window (yellow) with a 22-bar moving average applied, if you have a Worden platform I can give you the code for it, otherwise usually these two indicators (the x-over with RSI under 50) work pretty good on their own.

 The 60 min 3C chart shows a much narrower base than the broad market at the start of August, I suspect that's why it has given out and headed down earlier than the broad market.

The 30 min chart is just confirmation of the 60 min above.

The 15 min chart is confirmation, in line with price and no major divergences in sight to possibly interfere with the trade.

The 5 min chart is the same and this is the timeframe I'd be most concerned about as far as entering above the 60-min 22 bar moving average, if there were a positive divegrence here, I'd be a bit concerned.

If you like the swing trade idea, I think it can be entered now or wait to see if you get a better entry above the 22-bar, there's nothing that says you have to take the trade if it doesn't come to you and do what you want to lower risk or you can blend and phase in only adding if that move above the 22-bar (60 min) happens, that would probably be my approach.