Idea for XLF: - For summer-EOY, will likely need to look at Finance sector as one of the leaders in indices.
Technicals: - Price losing momentum (falling into lower channels), bounces appear corrective in nature. - Distribution pattern formed. - Ending diagonal broke down. - Price very likely to sell-off to bottom of the megaphone pattern, 9M SMA, 20W SMA, 200D SMA. - Usually the distributive sell-offs in indices form the W shaped harmonic structures, so a secondary sell-off is very likely. - Then a corrective rally into mid July, before selling off in earnest into Q4.
Fundamentals: - June 30, G-SIB banks begin stock buybacks, should save XLF. - However, this is extremely bearish after an initial relief rally, see:
It remains to be seen if the buyback rally will fuel another bullish cycle, leading into earnings season, or will indeed be corrective in nature, so watching out for the nature of the bounce, should it come.
Your input on bank buybacks was helpful. My hat and XLF charts didn't taste very good, but I didn't short it/lose $$. However I am back short XLF. In just now with $35 Puts w/ Oct 15th strike date...
Akksujean
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XLF bouncing up sharply as predicted. However, price action looks like a forced march uphill...not a single red candle on the 30 min chart today...
If XLF somehow makes a new high - I will eat my hat and my charts, but hopefully not lose my $$$. Watching/waiting for a potential new short entry.
UnknownUnicorn1043646
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@Akksujean, I think the 40s is possible to test and fake breakout on that previous support - as we expected the bank stock buybacks, but I am biased on testing the megaphone support or re-enter the descending channel (going down next week) at 37.15 area.
But good idea, need to be very careful with shorting in this market.