Soem days ago I highlighted an interesting chart pattern related to the pair XLF/KRE, mentioning that AMEX:XLF could soon outperform AMEX:KRE. Well it turned out very well.
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Applying some of the most popular indicators on the pair XLF/KRE shows an interesting pattern. While KRE has been clearly outperforming XLF since December 2018, a trend reversal seems to occur. XLF might catch up in the coming days and weeks.
in the current environment banks are leading the rally, but volatility is likely to return.but, volatility can remain low for long periods of time.
in this trade i see certainty in either direction as a positive. this trade captures either delta change or volatility expansion in the main leading sector.
in this trade we take a russell proxy KRE and SP 500 proxy...
mnuchin , powell, and trump have a bonding moment over a few hamberders one night. steve asks is liquidity secure? powell says we have a ton of excess liquidity, regional banks are unfairly hurt by rules to tame more sensitive banks. trump we need a rule change to allow a little stimulus juice to help industry. why not change rules on excess reserve requirements...
Two counts here: My preferred count in red showing a top has been made and to expect some sustained downside. The alternative blue count suggests the opposite and that another leg is in the offing as soon as this correction is completed.
The regional banks didn't bounce and I got stopped out by the blue 50 Week MA. The downward targets are the black 200 Week MA and the pink line or the dashed pink lines where there is a gap you could get a bounce off off.
We had a nice short squeeze past couple days but don't be fooled. Both long term and Short term trends are lower here. Yesterdays, Shooting Star isn't a bullish signal at all. Until Bonds stabilize this sector dead money for longs.
KRE might bounce here but we did have above average volume today. I wouldn't short here unless we start breaking yesterday's low. XLF didn't see the hire volume. Mixed read here for sure. My opinion, we are on verge of much greater down side.