Moving SL and adding new positions $FAZ. Short $XLF.Moving SL and adding new positions $FAZ. Short $ XLF. I expect a deep pullback on the S&P, DJI and Nasdaq index.
XLF trade ideas
Short XLF not because it is hard, but because it is easyIts top two constituents by weight, JP Morgan and Berkshire Hathaway's (stinky) B shares, have been performing very poorly in comparison to most stocks:
This along with XLK (tech bubble) and XLE (oil) are, to me, overvalued and must be denied higher prices.
XLF thougtsBigger picture wise, I think XLF should dip below 2015 low but not penetrate 08/09 low. So $14.9 is the first area I would think long.
I think we have have an opportunity here! $XLF $FAZI think we have have an opportunity here! $XLF $FAZ. Pullback on price action.
XLF - Financial sector SPDR S/R zonesHello traders,
Description of the analysis:
The financial sector is showing an attempt at stabilization, but so far there is no talk of stabilization. We see gaps up and down. It is necessary to wait for a clearly defined volume distribution. Gaps tend to fill sooner or later. The way up again will be hampered by marked resistances. At the moment, I would be very careful to invest in this sector.
About me:
Hi, my name is Jacob Kovarik and I´m trading on stock exchange since 2008. I started with a capital of 3000 USD. My first strategy was based on OTM options. (American stock index and their ETF ). I´ve learnt on my path that professional trading is based on two main fundaments which have to complement each other, to make a bussiness attitude profitable. I´ve tried a lot of techniques and many manners how to analyze the market. From basic technical analysis to fundamental analysis of single title. My analytics gradually changed into professional attitude. I work with logical advantages of stock exchange (return of value back to average, volume , expected volatility , advantage of high stop-loss, the breakdown of time in options, statistics and cosistent thorough control of risk). At the moment, my main target is ITM on SPM index. Biggest part of my current bussiness activity comes from e mini futures (NQ, ES). I´m trader of positions. I´m from Czech republic and I take care of a private fund (4 000 000 USD). During my career I´ve earned a lot of valuable experience, such as functionality of strategies and what is more important, control of emotions. Professional trading is, in my opinion, certain kind of mental training and if we are able to control our emotions, accomplishment will show up. I will share with you my analysis and trades on my profile. I wish to all of you successul trades.
Jacob
XLF Long Term ChartEveryone knows that we're gonna have issues with financials given all the bankruptcies that are going to happen with oil companies, restaurants, and other businesses.
The thing is, it took a full year for XLF to collapse from current price level to the bottom back in 2009. Much the same, I don't expect the market to hit bottom until next year....
What's amazing is how fast it dropped in Feb/March, not the whipsaw bounce we're seeing now. It's gonna be a long slow ride down...
THE WEEK AHEAD: WFC, C, JPM, BAC EARNINGS; XLF, IWM, XLU; /CLEARNINGS:
And ... we're back into earnings season, which ordinarily kicks off with a bunch of financials. Generally, I don't play these for volatility contraction, since they don't get all that frisky generally, but this environment is a tad different from quarters past, with the 30-day in WFC (45/76), C (44/91), JPM (41/63), and BAC (40/70) all greater than 50% and with the sector exchange-traded fund up there as well (XLF (47/58)).
Rather than play one of the single names, I've pondered what could be done in the sector exchange-traded fund, XLF, instead. Pictured here is a long-dated XLF call diagonal with the back month at the 90 delta in June of next year, the 30 delta-ish front month in June of this one. Ordinarily, I don't go that far out in time with the back month, but June '21 happens to one of the expiries with the lowest implied, so it will be one in which the 90 delta has a lower extrinsic value baked into it compared to expiries of shorter duration. Costing 8.36 at the mid price, it has a break even of 23.36 versus 23.38 spot, a debit paid/spread width ratio of .76, and delta/theta metrics of 58.64/.77, so it's neutral to bullish assumption with plenty of time to reduce cost basis via short call roll. You'd be paying 8.36 for an 11-wide, so have a max profit potential equal to the width of the spread (11.00) and what you paid (8.36) or 2.64 ($264) -- about 31.6% return on capital, assuming max profit.
Naturally, it would have been more awesome were one to have gotten in at the 3/22 17.50 lows.
EXCHANGE-TRADED FUNDS WITH 30-DAY IMPLIED GREATER THAN 50%:
XLU (52/52)
XLE (47/75)
SMH (43/57)
GDXJ (41/81)
EWZ (40/74)
EWW (39/58)
SLV (34/50)
XOP (33/100)
USO (32/128)
GDX (28/62)
BROAD MARKET:
IWM (53/54)
TQQQ (47/122)
QQQ (40/42)
SPY (40/41)
EEM (35/40)
EFA (31/35)
FUTURES:
/NG (78/73)
/ZW (69/36)
/GC (41/31)
/ES (40/42)
/SI (34/48)
/CL (32/1555)
/ZC (29/32)
/ZS (21/20)
I reference /CL in the header, primarily due to the background implied, but also due to price action. Some of the volatility may piss out at futures open given a supposed agreement by OPEC+ to cut production by 10 million bpd or so, with the last holdout -- Mexico -- coming on board. If we revist $20/bbl., I will consider adding /CL out-of-the-money short puts.
VIX/VIX DERIVATIVES:
What's new ... . We're in a high volatility environment and in backwardation with VIX finishing the week at 41.67.
MUSINGS:
In The IRA: Things aren't looking all that great for me from an acquisition standpoint with the short put ladders I stuck out there for things on my shopping list -- at least for the April "rung" of them. That's okay, since if they expire worthless, I'll keep the premium associated with that rung. Naturally, if I don't pick up jack via assignment, I'll look at re-upping with a rung to replace the expiring worthless if that happens or just let the remaining rungs ride and look for opportunities going forward. A lot can happen in a week ... .
XLF to Long, in Uptrend , Triangle consolidationCondition:
1. Downtrend line was broken by breakaway Gap (G1).
Start a new trend.
2. Weekly demand zone confirmed. (07/01/2016)
3. Triangle consolidation, near the uptrend line.
Entry in side Triangle: below 21;
or buy at next open if Gap breaks the Triangle downtrend line (G2)
Stop: 20.5
Target1: 24; risk/reward=1:6
Target2: 25; risk/reward=1:8
This is a trading school homework. I need 6 months to practice trading plan.
If you like it, thank you for your support. Please use SIM/Demo account to try it, until my trading plans get high winning rate.
Bear Flag Building in FinancialsLooks like a pretty clear bear flag in XLF. Financials have lagged the broader market on this bounce and I'd expect them to break down first. Should be a fantastic short opportunity.
Banks are drowning, bailout needed!US is swirling in a mountain of debts and with QE4 , they are printing more money to help shore up the failing industries, tourism, hospitality, oil, banks, airlines, etc. The debts mountain are getting higher and higher, breaking its previous peak year after year. And this is definitely not good in the long run when the bubble breaks!
Here, we compare the XLF ETF . Click on the Holdings and you can see the top 10 holdings which shows the list of financial institutions.
I expect more room to go down towards the support zone at 14.98 to 17.31 where it probably might have a pullback. Thereafter, we have to assess the situation and see if price action supports and heads higher or continue to go down.
Here, we see the legendary Warren Buffett spending 2.2 billion to buy back Berkshire shares in 2019. See, even someone of his level does not time the market as the price of Berkshire continues to go lower (meaning his 2.2billion purchase would incur a paper loss). But important lesson is he is buying them much cheaper though he does not know when it is going to bottom.
So, Citigroup and other banks are still a sell for me , for now.
XLF looks relatively betterI think it will bounce higher than other sectors. Just wait for timing. Current situation can not chase high.
XLF at key level - watch for bounce?XLF (Financials ETF) at a key level around 23.....long term trendline from 2011 (note RSI also at lows last seen 2011) and also within 4% of the Dec 2018 spike low support.
With the FED expected to slash and burn rates next week the worst of the decline for banks etc may be "in the price" and may see a bounce (short term) at least
XLF Financials Next movesFinancials yesterday did very well and rallied almost 6% by end of the day. While XLF is near a support level and has bounced off of its Monday lows, in order for a meaningful move higher, i feel that it needs to consolidate and build momentum. See example in yellow box back in Aug 2019, where it consolidated to pushed higher after a ~10% fall.
I'd like to see the VI get above its 24 moving avg, and RSI diverge higher as price moves sideways. In times of down turns as severe as this, while we may at times get snap back both up and down with little reason or cause, in order for one to be fully committed to either side, we need to see evidence of consolidation, and not just guess that one day it will chop higher and next day it will chop lower. Cheers.
The Great Bear AssaultSeems like only a fortnight ago when I wrote about the `Great Plains Battle` and how the bulls had to either emerge victorious there or surrender. The bears did not give *any* ground. Today, it is clear that they have nearly ousted the bulls from the plains and, in fact, are now taking the battle to the heart of bull territory (green rectangle). I definitely expect a ferocious battle to take place there, even with the Phoenix (VIX) now at historic strength.
That said, if the bulls fail to protect their home base, then who knows how far this market may fall...
I hope those who follow me have at least protected your wealth. The drop is happening many folds faster than even I expected, as you can see in my unmodified chart. Please trade safe and good luck!
Banks can't make money like this, look at Europe to see how badThe foundational problem here is that globally there is no growth story that does not involve assistance from central banks, which has been clear for a few years now. Regardless it has been great to be in stocks but, at the end of last year signs of the US consumer slacking off started to crop up. The first signs were in durable goods after that, transports fell off a cliff. Inflation has been with us for years but they measure it incorrectly by taking a bunch of products made in china, like TVs and clothing which mask the reality of the fact that everything involving real estate (rent, food...) has been inflationary. Everything involving human services has also been inflationary (health care, education, construction costs.) While everyone celebrates low unemployment rates, they are very inflationary. Try getting someone to build or fix anything without paying a fortune and it becomes clear.
The Yen as a flight to safety currency has been absolute BS for years now but that trade would not die, it has been with us since the 80s, if anyone cared about fundamentals it should have broken with the onset of Abenomics. The yen VIX ratio just broke down. Then gold surged against the Yen, XAUJPY blasting past all-time highs.
Nobody seems to care about this problem in Japan but what it means is that the Nikkei is about to get rekt. The only thing that has held that market up for many years now has been the reversal of the yen carry trade and people buying shitty Japanese stocks every time the trade reverses. They are about to get a margin call on a mass scale. How much money do the Japanese have in the S&P 500, they will be forced to dump right at the worst of the volatility spike. That SPX chart will be a sight to behold.
The next piece that you need for mass inflation is a disruption of the supply of goods, enter in Trump trade wars and tariffs...
Everyone who thinks this is all about the coronavirus will be very confused when they see what comes next, they will talk about what BS the reaction of markets is and, and ...
I thought that the story was going to unfold gradually over the next year, then the bigger disruption of the supply of goods started to kick in with china shutting down. This is almost certainly not long-lasting but it is a trigger event and the nail in the coffin is the drop in rates and yields.
Here is the problem, the markets will probably continue to correct for 6 more weeks or so. If it is fast and not gradual gold will get hammered short term with all the margin calls on everything else. Bonds and cash is where it's at for the correction. That being said I would not short gold at any time, this is not going to be a liquidity crisis like 2008 but people will look at that chart and dump gold assuming that it is going to do the same thing, they will pile on the shorts and drive gold to all-time highs when the short squeeze happens. After the big correction, it will be metals TIPS and gold miners.
Gold miners will correct at first but then enter a bull market. They are already making record-high profits because the cost of production is at the lows due to the valuation of oil and the local currencies where they operate vs. the USD.
The low the GDX just hit will likely be retested in an SPX crash, maybe lower. After that, they will remain among the few who's profits are growing. There will probably be a bubble in the GDX after the initial correction.
One could go on and on with arguments for metals (election year, CBs, Europe...)
