I try to (and don't have to try hard) to make it a habit not to listen to CNBC, there's a very good reason for that. However every once in a while like on F_O_M_C days I'll tune in to listen to the policy statement or the press conference and I invariably end up hearing more than I intended to, usually because I'm too busy to turn off the TV on those days.
This story that rate hikes will be good for financials is about as bunk as they come. Are we talking about extra income from nonexistent mortgages? Loans for Cap-Ex spending when no one is spending on Capex during 6 years of ZIRP? I'm not even sure the banks know what their business model is anymore once trading dried up.
In any case, Financials have been one of my favorite long term core shorts and I fail to see how a 25 basis point hike or even a 100 basis point hike is going to turn things around for them after watching the way they use add backs and the such for reporting earnings that stink to high heaven.
In any case, most of that is opinion, that's not what I'm about, the charts are what matter. When I write the third section (final) post in the "Understanding the Head Fake Move", I suspect XLF/Financials will be one of the example charts that ties it all together.
Like the SPX and other of the major averages, this is
as close to perfect as you get in creating a head fake pattern as every technical trader knows what a triangle looks like. The head fake move would be above the apex (yellow) and there it is.
To confirm though, we need the charts...
This is the 2 hour 3C / XLF chart, I think the signal at the breakout/head fake is pretty clear.
The 60 min chart is a very strong timeframe, but more detailed. Once again, it's pretty clear to see what happened.
And the 15 min chart is more detailed, not a drop of confirmation, in fact the exact opposite.
Coming back around from the short term charts' trends...
The 1 min trend not only negative at the false breakout but perfectly i line on the downside with any counter trend corrections shot down.
The 2 min trend needs no commentary.
However, as I said back then on April 2nd, what I find interesting is that these price patterns that are so well known, were not naturally occurring...
This 5 min chart shows distribution at the top of the triangle trendily to make sure it doesn't go above and small accumulation at the lower triangle trendily to make sure it doesn't go below. These were not random;ly or naturally occurring, they were put there for a reason and that reason is on the first chart above in yellow.
For this and numerous other reasons, Financials are one of my favorite core short/trend short positions.
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