This Week's Exchange Traded Fund (ETF) is XLF: XLF includes companies from the following industries: banks, diversified financials, insurance and real estate. This ETF normally invests at least 95% of its total assets in common stocks that compromise the aforementioned industries.
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The XLF has adopted a policy that requires it to provide shareholders at least 60 days notice prior to any significant material change in its underlying weighting. Be it known, the XLF is not a diversified investment vehicle since its concentration is solely in the financial industry.
The last two candlesticks formed a bearish Japanese chart pattern I won't address for reasons of brevity. This bearish reversal pattern speaks volumes in a strong potential for change in trend. Moreover, I believe the bearish pattern also signals a dislocation betwixt the market’s health and market value of XLF, caution. Though the long-term trend is still bullish, there are complex technical reasons that make great sense to be negative and establish short positions, right here, right now.
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"For aggressive trading purposes (stock and options), I've set the initial profit target at $13.90, but if XLF closes below $13.70 the same day it breaks $13.90, I would recommend holding until further update ...
Only a print of $15.45 would force me to abort the trade and admit I was wrong, thus the established failure target."
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After a period of consolidation, XLF exhibited a decent climb last week, I believe it's time for it to pivot-lower. The weekly chart is giving the same negative signal.
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As evidenced by this chart, the XLF touched significant resistance just days ago:
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I am anticipating a bounce back and thought Capitalist Pig Bob's friends must be informed. Obviously, the XLF retraced lower the last time it touched the top of the Bollinger Bands, and I expect nothing different this week, and Pig Bob's friends would be wise to heed my warning.
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CPB thanks Johnny Mylant for his work and looks forward to more of his technical insights from his scenic Rocky Mountain hideout in Colorado. Here's some of John Mylant's work on Seeking Alpha:
http://seekingalpha.com/user/435182/comments
9 comments:
I like the trade, thank you John.
Leo
15 Jan $15 puts, feel the XLF will fall soon. Appreciate the analysis John, Glenn in Utah.
XLF failure trigger at $15.45, what abt profit target??
CPB's friend NP
congrats john and potc -despite inexes up, xlf closed flat, holding and hoping for profits by Thursday ..
Craig I
Okay guys we are on our way but have not broken the 15.10 barrier yet. 10:19am eastern...
John
http://seekingalpha.com/user/435182/comments
XLF is a breakin' down, maybe POTC will be 3 for 3 in 2010? It's possible, best of luck fellas,
Bill, TA subscriber.
broke it, now the fun begins ..
Dan
S&P working in ur favor, good call so far.
James P
I will give it until Friday, also think the overall mkt is due for a correction.
AM guy
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