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A comment cleaner while I have a moment………..the ol’ “Tim travels internationally, so the market falls” rule seems to be working like a charm. I’d also like to emphasize how financials, a crucial component of this more-fragile-than-people-think market, is ready to turn lower.
As economic data continues to worsen, and the jobs situation has clearly moved past the point of peak prosperity, equities are – – naturally – – roaring higher, as they have all week long. We’re up about 1500 points on the Dow from the bottom just a few days ago. In the midst of this, I’d like to suggest you keep a close eye on the banks, as they’re not buyin’ it.
Earlier today, I sold the entirety of my XLF puts, in spite of the fact they don’t expire until January 2020. I’d like to get in again at a good price. But I felt it was an opportune time to scoot, based on the trendline support.
It was with some concern a few days ago I expressed in a post to my Gold and Diamond members that the financials were breaking to the upside. The failure of the XLF is/was an important part of the prospect for any downtrend in equities. As of this writing, this breakout remains in place, but XLF demands close and constant observation.
Looking at a trio of overbought/oversold indicators, set to their slowest parameters, the financial sector definitely seems richly-valued.
I’d say the biggest risk for the two or three bears left on Earth right now is the financials, shown below in the form of XLF. Notice that horizontal I’ve emphasized at the 27.33 price level. We’ve got a clean IHS below it, and should we cross 27.33 to the upside, that sets up the pattern to pierce the descending trendline (yellow tint), at which point it would be like a 42-gallon drum of gasoline on the bullish fire.
