XLF Update

I just wanted to update Financials considering the recent posts/Trade ideas from Friday, Still Like FAZ (3x short Financials) as XLF looks to give up gains and yesterday: Quick Head's Up XLF / FAZ & XLF (short) / FAZ (long).

I wanted to show you where the Trend Channel stop levels are as well. Yesterday's post, XLF (short) / FAZ (long) contains most of the important 3C charts and they haven't changed so I'll update the intraday charts and the Trend Channel stop which is very close.

 The Daily Chart of XLF is really near perfect for Friday and yesterday's XLF short / FAZ long ideas as the two candlesticks in yellow from Friday and yesterday (daily) are not only gapped up with long upper wicks indicative of higher prices being rejected intraday (not the kind of candles you want to see at highs), but  in addition the large volume on the two days that failed to close at the highs with significant volume on both days is indicative of bearish churning or the handing off of shares from strong hands to weak hands, at least that's a common definition of churning.

 The 60 min Trend Channel has already been broken, the next one we are looking to is the daily Trend Channel.

 The daily Trend Channel stop is just below at XLF $24.40 on a closing basis.  Financials are down about 1% thus far, a bit more earlier as I saw FAZ up over 4%.

The 10 min chart really shows the more intense recent distribution in to what looks loosely like our rounding top with a head fake or the "Igloo with a Chimney" with clear pick-up in the 3C leading negative divegrence in the head fake or "Chimney" area.

 The XLF 1 min chart shows very clearly the leading negative yesterday which prompted the head's up post and the one that followed, XLF (short) / FAZ (long) making yesterday a VERY attractive entry/add to position.

Note the clear distribution/3C negative divergence through Friday/Monday at the churning area.

However, looking at some of the longer term charts posted yesterday (the link just above), Financials are in a great overall spot for a short position, although I don't like chasing or shorting on weakness, when considering the big picture which I think is far more essential right now, XLF remains in a fantastic area for positions in my view.

 A closer look at the 1 min intraday since yesterday shows the flat range for about an hour with a deep leading negative divegrence at #1, another leading negative divergence on the close yesterday at #2 and a relative (weaker form) positive divergence at this morning's intraday lows, a toe-hold with 3C simply in line (green arrow @ #4) since.

The stronger 3 min short also showing distribution through Friday/Monday highs and a relative positive divegrence at this morning's lows will likely hold XLF in the area for a little bit until the divergences start turning negative. I don't know if there's enough strength in the positive for a gap fill attempt, I just know this market for the last 4-5 years has been ruthless about filling gaps so if I were interested in shorting or adding to an existing short, I'd be setting price alerts in the gap area and at a gap fill and look to short in to some price strength on a tactical basis, on a larger strategic basis, I think this is just about as good of an entry as you can possibly ask for.