XLF trade ideas
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...)
XLF Financials also laggingThis one surprises me a bit, mortgage rates lowest ever, there will be tons of loans that will be refinanced.
Charts seem to indicate it's headed towards the next support though.... we'll see.
Who shall win the Great Plains Battle?Within a week of taking control of the Great Financial Wall, bears drove the bulls far into plains territory where a riveting battle has ensued. I have to show some respect and commend the bulls who have stood their ground the past few days despite having lost the protection of the wall and being ravaged non-stop by the bears and fire of the Phoenix (VIX). However, I must warn that if the bulls lose this battle as well, then it would no longer be bravery but nearly suicide to try and press on. The next evolutionary stage of the Phoenix is of such power it may not have been seen for over 90 years, a fire that could obliterate everything within days. Also, today, the Great Wizard (central banks) fired a spell that worked many times to empower the bulls (rate cut), but it utterly backfired.
In light of the coronavirus and today's FED failure, I now see the possibility that the bull market is finished, so I added a new potential trend line down to XLF sub 12 by 2021.
Please stay safe and good luck, friends!
XLF - Fed rate cutThe obvious beneficiary of a rate cut is financials. I thought about XLF calls Friday afternoon but bailed because I didn't know why the market rallied. Silly me, of course it's the Fed. SHould have known since they burned me in 2008.
Expect XLF to rally into teh Fed meeting in March.
Also, way oversold like everything else, lol.
$XLF Oversold but still showing weakness Bounce to 28 then dropOversold indicators, closed below Oct bottom , long-term weakness identified maybe due to more cutting of interest rates but now expecting bounce to 0.62 fib then falling again (+10%) or can be extended to 1.32% fib then drop but its not unlikely
Bears have full control of The Great Financial WallWell, well, folks, for those who have been following my narrative about The Great Financial Wall (GFW), it shall be told now that, after months of battle, the bears today took full control of the GFW. With much pain, they thwarted the final stealth bull attack (ie. repo injections) which almost allowed the bulls to reach the other side of the wall.
However, as it stands today, the greatest bears who have withstood years of loss and humiliation are now standing atop a solid defensive structure and an array of arsenals at their disposal. Now they await the arrival of their brothers and sisters to begin the march into the corrupted heart of the market to finally clean it out and bring the economy back to reality.
No doubt, there will be many battles to be fought as the bulls still have strength south of the wall. However, the bears have gained the most important ally, the Phoenix of fire (VIX), whilst the magician of the bulls (central banks) have perhaps one more trick up their sleeves. Unfortunately, they wasted all their ammo jacking up the market instead of actually saving the economy.
Good luck to all! To my friends who do not know how to play a bear market, please stay in safe assets. To my bear brethren, stay strong and watch out for the short squeezes which will inevitably come!
Will the bulls breach the great wall of resistance?This week's market movement has been baffling. The bears were on the verge of striking the bulls down from the great wall of resistance, when they suddenly returned, with great stealth and silence in the wee hours of the night, to retake a central place on the wall.
Have they succeeded in using guile and deception to defeat the bears once and for all? I think it is possible. If the wall of resistance is completely broken above, then this fantastic wave iii of 3 rally that bullish dreamers have been talking about for years could become reality.
However, I continue to favour the bears. When I observe this chart, the gaps all the way up tell me that bulls have been using deception and manipulative (under the table) techniques to climb the great wall (since way back in the Fall). Once the deception is exposed, the bears, who stand together in strength, should perhaps stand a chance at victory.
If it is these underdogs who win, the defeat for the bulls will likely be beyond shocking, as their ranks are ripped out from beneath their feet, thrown back into the gaps from which they climbed, and the (VIX) Phoenix rises to even greater heights to breathe its fire on these scattered few who choose to remain.
Good luck trading this wild beast of a market, friends.
WARNING: Bear attack from the Great Financial Wall in progress..As of Jan 23rd, the bears are no longer just holed up along the Great Financial Wall. They are striking back and have dealt a powerful weekly defeat to the bulls this week, assisted by their most powerful ally who has risen from the ashes and breathes fire from the skies for the first time in two years: The VIX Phoenix.
Weekly Diary:
Jan 23: Bulls hold up
Jan 24: Bears win first round
Jan 27: Bulls begin to high tail from the wall in a panic. Bears give zero ground the entire day.
Jan 28: Bulls put up a counter attack and inch back toward the wall.
Jan 31: After a few days of fighting, the bears achieve their first decisive weekly victory, smashing the bulls' multiple counterattacks.
The bears now have control of the wall *and* the Phoenix.
This is an imminent warning that we could witness a drop worse than Feb 2018 very soon.
Technical Note: You will likely see this in the media in a few days, but my system has already detected both the titanic and hindenberg crash warning signals. Please take heed.
XLF - a more bearish countI posted a bullish chart for US financials a little while back with it looking that nothing can hold stocks back at the moment. With the recent events of this virus (I live in Asia) I thought I should include this more bearish outlook. While it suggests that this ticker has finished a 4th wave correction and will now climb onward it also suggests that the next correction might be a biggie. As always, any count is just a possibility and while a few weeks ago I was firmly in the bullish count this Corona virus is perhaps presenting a "black swan" that hasn't fully revealed itself yet. The R1 and S1 are the yearly pivots.
XLF Ascending Triangle Level of Resistance $31Purely a speculation on my behalf that XLF will reject again at this $31 level like it has done several times thus far. Alternate plays would be $TLT to the upside. Bitcoin USD showing risk off action that leads me to believe the selloff isn't over and the reversal from the big upside at the open this morning for the QQQ, etc. also leads me to believe that we're not done with the selling. (I'm wrong more often than I'm right on the timing of things so may not happen immediately). But I've been using bitcoin as my compass here lately and it's been an accurate direction indicator for the broader market. Goodluck.
These are my opinions only, and not trading advice.
02022020 Palindrome Day - Continuation or Mirror of Past Decade?XLF has bounced off its previous high of 2008. (Followed by the 2008 financial crash started by the housing market).
Breaking above this will trigger an investment spree the likes of which we have never seen before.
Dropping away will likely trigger a reversal in trend, and the end of this spectacular growth for perhaps a decade or more.
We will know by the end of February 2020.
FINANCIAL SECTOR LEAD BEAR FOR THE MARKETTICKER: $XLF
Financial sector is the clear lead bears for the market. We rejected hard at 31.10ish level and broke key support level of 30.46. In my opinion, this is the reason why $SPY pulled back hard.
We had huge bear volume on Friday and if we break the low of Friday (30.20), look for a continue dump to fill the gap under 30.13.
Can the bears dethrone the bulls in the short term?
The Great Financial Wall Stands StrongThe Great Financial Wall that I posted about last time has withstood 6 weeks of bullish onslaught and held. Daily MACD has turned negative and, with respect to fractal intervals, I believe the bears that have survived and remain on the wall are about to fire back. Completely exposed and with little ammunition left, I'm afraid the overly confident bulls will high tail from the wall as fast as possible or risk being slaughtered.
Going short. If you don't know what you are doing, stay out and safe. Good luck friends.
The Great Financial WallIt is with great sadness that I write this today. However, my humble opinion is that the assassination of Irani General Suleimani is not some singular event in the space-time continuum that can be ignored. In fact, it will, in all likelihood, eventually make it into the history books as a parallel to the assassination of Archduke Franz Ferdinand leading up to WWI. I am not supporting this man's crimes, rather condoning the thoughtless method in the which his demise came to be.
Some may see President Trump as a courageous new figurehead who will bring greatness to America again. However, I see him as the mostly untold story of Hercules, a strong and insanely courageous, but *wreckless* man who will destroy decades of peaceful global collaborative progress built by generations of predecessors.
Today, I throw myself out there again and predict that the next Great Wall will not be the Great Wall of China, nor the Berlin Wall, nor the Steel Wall of Mexico, but the Great Financial Wall that may not be surpassed for years to come. (Mind you, Trump has already greatly humiliated and angered two of these aforementioned great cultures during his Presidency and no good will come of that either.)
I am officially switching my stance from neutral back to short based on the important trigger event that unfolded on Friday. Now it's time to patiently wait for support levels to drop out.
Good luck and stay as safe as you can, friends!
