03/20/23
The financial sector’s violins appear to be playing beautifully…on the deck of the Titanic.
Everywhere you look, you can find someone who is telling you how “strong” our economy is.
How “strong” the banking system is.
Then you realize you’ve heard this all before.
So we are going to cut through all that noise and make some money – targeting prices for a potential short play.
The financial sector’s ability to hold its current position is dire…
And if it doesn’t keep it together, I’ve got a few key levels to watch for a nice short:
Here’s the Financial Select Sector SPDR ETF (XLF):
This isn’t our normal look at the daily as we are zoomed out back to 2020.
Why there? The Pandemic.
The fallout that took place when Covid-19 hit the US created quite a few air pockets and, if things don’t shake out like we hope, it gets ugly… fast.
All EMAs are trending lower with only four pennies separating the chart from being bearishly stacked…
In other words, descending from highest to lowest (200>55>21>13>8).
Frankly, this will likely be the case within a day or two given how quickly the chart has moved downward.
The blue highlighted channel ranging from ~$30.00-$31.00 is essential to the current situation because it marks an area where XLF fell through and then briefly failed before pushing over as the market went to all-time highs…
Notice we are dancing with it again for the third time in less than a year.
Now, a dead cat bounce is likely if it holds above $30.69 where the turnaround happened in October and the Triple Stochastic on the lower chart is attempting to confirm this.
But I’d only give it space to ~$33.20, max…
Unless there’s a recovery above that, I’d look for a solid short trade.
The first target is marking the low of October 2022 at $29.58 with a second target not much further below it — $28.82.
Of course, if you’re feeling saucy, setting an ultimate target in the mid to low $25.00’s could be rewarding…
That’s the massive gap highlighted in red…
Let’s see if all the shushing over banking is warranted or not.
This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.
