Financials

I haven't had a chance to confirm among other industry groups yet, I will look, but I would have expected our bounce to have started soon after 2 p.m. when the op-ex max pain pin typically ends.

Financials are showing a few reasons intraday why it maybe hasn't begun yet and there may be other groups, as I said, I'll check in to them.

Larger picture, what have I been saying for years about QE? I've been saying that the initial , very public bailouts including AIG, GM etc. were not popular with voters, if I was the president I'd likely have called Bernanke and said, "I understand we need to prop up our banks, but more importantly, we need to prop up my re-emection chances... Give me an alternative to the public bailouts"

Thus QE was put in place. If you don't know, then I'll tell you in a nutshell, the F_E_D started fooling with open market operations in the 1920's under NY F_E_D president, Benjamin Strong. He started it, he introduced it, he oversaw it and saw the roaring 20's and initial success, he dies in 1928 so he didn't get to see how it ended shortly after his death in 1928, although many Germans still remember how such operations ended in the Weimar Republic and still have disdain toward QE to this day.

The point is, I have long maintained that QE has been nothing more or less than a stealth bank bailout. Banks had quarters that didn't have a single day's trading losses, it put money in their pockets and the general public had no idea what any of it meant.

What has happened to Financials' earnings since the end of QE3 on October 31st? Look at JPM, Goldman Sachs, Bank of America, it hasn't been pretty so it tends to lend some credibility to my long held belief that QE was a stealth bank bailout.

That in mind, Financials (FAZ long) are one of my favorite shorts.

 intraday XLF hasn't been looking too good since about 12:30 with negative 3C intraday divergences and a leading negative. I can see how it might be difficult to start a bounce with a major industry group like Financials not looking great intraday.

This is XLF's 2 min chart with the most recent divergence, negative, probably passing, but for now, negative.

A closer look at the 2 min intraday.

And even the 3 min intraday.

I suspect this is one of probably several reasons we haven't seen the market start to bounce yet.

 The 5 min XLF looks like it will bounce, although this is one of the weaker positives on a 5 min chart and one of the groups I like the most on a short sale trade, as long as you let the trade come to you.

 As for the big picture, XLF 60 min...

FAZ is 3x short Financials, you buy it long for 3x short Financial coverage.

 On an hourly chart, it's the opposite of XLF, so good confirmation, I like this one a lot and hold it personally.

The 15 min chart looks great.

The 5 min chart looks as it should, negative to the broad market's 5 min positive, the bounce in the market, pullback in FAZ which creates a nice opportunity to buy FAZ in to price weakness, underlying strength.

 The 3 min chart looks like FAZ is ready to pullback and the bounce in the market ready to start, but like XLF's 1 min intraday chart...

FAZ is putting in a small, weak, but positive divergence, like XLF's negative on the same timeframe.

This would partially explain why the market hasn't begun a bounce yet.

More importantly, this shows why I favor FAZ long/XLF short moving forward. Earnings since the end of QE verify what I have suspected for some time.