Sequence Intact … So Far
The segment at left, shows confirmation, the financial sector is following a Fibonacci sequence for pivot points.
As stated in the last update, this usually takes place when markets are emotional, stressed, or both.
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The Danger Point®, trade mark: No. 6,505,279
The New, ‘Subprime Contained’
That’s how mainstream financial media labels it.
Not to worry, it’s only:
‘Isolated Fraud‘
Some know but probably most don’t, the banking laws were changed over a decade ago, in 2014.
Details about those changes, are here and here.
With that said, price action of ETF financial sectors KRE and XLF, have not completely melted down … yet (not advice, not a recommendation).
What they have done, is topped, reversed, and are now testing resistance levels; especially XLF.
Financial Sector XLF, Daily Close
For reference, the all-time high and reversal (still intact) was first discussed here.
Also shown, is the Fibonacci time sequence that appears to be in-effect.
Fibonacci sequencing tends to work best when markets are highly emotional (like now).
Monday, is ‘Day 8’.
Let’s see what happens next.
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The Danger Point®, trade mark: No. 6,505,279
Wedge & Breakdown
According to this link, Uber is the 95th most ‘valuable’ company in the world.
They’re also a magnet for lawsuits.
When looking at the chart, there’s a top lasting around five months; last week, was the breakdown.
Uber, UBER, Daily Close
Note on the left side of the chart is wild, volatile (unstable) price action.
It then coalesces into a small area (the wedge), with four failed attempts to move higher over this month and last.
Tight price action typically precedes a breakout move.
All of which resulted in positioning short as UBER-25-04 (not advice, not a recommendation).
As stated with yesterday’s update, the overnight Sunday session opens later today.
If either the Uber or XLF shorts, present the potential for sustained upside, an exit of both is likely (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Deja Vu
Has the melt-down smoke cleared, or was this week just the first Dominoe to fall?
The most recent post on the banking sector is here.
From that, we had:
“Financial sector XLF, has topped, reversed …”
The initial (nascent) downtrend was broken to the upside; short position XLF-25-07, exited with a small gain.
Then, we had this week.
The sidebar on yesterday’s post, shows a new short; XLF-25-08 (not advice, not a recommendation).
The update was about plans before the close. In the final minutes of trade, we have Uber short; UBER-25-04 (not advice, not a recommendation).
We’ll discuss both positions with charts over the weekend.
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The Danger Point®, trade mark: No. 6,505,279
Top & Trend
Financial sector XLF, has topped, reversed, and now appears to have formed a nascent down-trend (not advice, not a recommendation).
Top ten components are listed here.
Of those ten, nine are directly related to banking, credit or the insane (dubbed ‘pornographic‘) valuations of the market.
Financial Sector XLF, Daily
There’s an open short position, XLF-25-17, with stop located at yesterday’s high.
After today’s session, that stop will be moved lower to the high of today, currently at XLF 53.48 (not advice not a recommendation).
It’s important to note, although the trend appears to be lower, XLF has penetrated established support.
That puts it in Wyckoff ‘spring’ position. Some (marginal) upside is to be expected.
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The Danger Point®, trade mark: No. 6,505,279
Where Is It?
As Ed Dowd says in this interview (time stamp: 19:16), somebody in the banking system’s holding The Old Maid.
As the overall markets continue to form what looks to be a top, maybe ‘the’ top, a process of (trade) iteration is occurring.
The objective is to determine which sector is the most vulnerable.
Short positions in the Dow and the SOXX have both been stopped out (not advice, not a recommendation).
With implosion of Tricolor Auto and now First Brands, the market itself is telling us, look at financial sector(s).
With that said, short positions have been opened in XLF, and KRE; both of which so far, are holding below their early session highs (not advice, not a recommendation).
Charts to follow.
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The Danger Point®, trade mark: No. 6,505,279
Canary in The Coal Mine?
Friday’s downside action hit retail brokerages hard:
Schwab (SCHW) down -5.72%
Interactive Brokers (IBKR) down -6.41%
Interestingly, Robinhood, poster-boy for the novice ‘investor’, was whacked early in the session but recovered, closing lower by only -1.61%.
Adding to that, is the table below.
Financial Services, Capital Markets
This is part of the Finacial Services sector, showing major brokerage firm’s trading last Friday.
The upside in after-hours for HOOD, was the announcement it’s being included in the S&P 500.
If you have been in this game long enough, ‘last gasp’ indications like this, are typically contrary indicators (not advice, not a recommendation).
Note: The S&P reached its all-time high on Friday
Watch to see what happens next.
Does HOOD hold the upside (starting tonight), and move higher, or does it start slipping away.
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The Danger Point®, trade mark: No. 6,505,279
The Big Picture
Each market session provides another data point, bull, bear, or congestion.
Yesterday’s position in XLF, was stopped out the same day with a minuscule loss.
That trade was an excellent example of operating at the market’s edge and maintaining discipline.
Another data point.
However, one market not making new highs, or threatening the current short position (yet), was biotech, XBI; short trade XBI-25-03.
So, let’s take a look at what’s really going on.
Biotech Sector SPBIO, Daily Close
We’re far away from all-time highs.
The Fibonacci retracements are shown.
At this point, we’re oscillating around the 23.6%, and in up-thrust condition.
The second chart zooms-in on the set-up.
Set-ups don’t guarantee anything.
They just mean the market has reached a point where risk could be at a minimum.
Bull or Bear
With the SPBIO (XBI as the proxy), we either have a breakout above resistance or an up-thrust as previously mentioned.
Until the market proves otherwise by making new daily highs, the condition continues to be traded as a potential (significant) downside reversal (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
At The Edge
The last update on Financial Sector, XLF, said it was in potential up-thrust (false breakout) condition.
Monday’s action was slightly down and today; we have a new daily low.
In addition, as we’ll see in the chart, all of this action is taking place below established resistance.
Financial Sector XLF, Daily
We’re at the ‘edge of the lake’, as David Weis used to call it. This is where the risk of being wrong is least.
Since the market’s posted a new daily low, risk on a short position is well defined, i.e. yesterday’s high (not advice, not a recommendation).
Currently short this sector as XLF-25-06, with stop in the vicinity of XLF 53.58. After the close of this session, the stop (if not exceeded) will be moved lower to the high of today’s session (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Bank of America & XLF
It’s no secret, Warren Buffet has been selling BAC, shares for some time; more recently, here.
The hard part is, how does one map that to price action?
Or does his selling have any material effect.
From a Wyckoff standpoint, we put that information in the background.
It’s there, we’re aware of it, but the focus is on price action itself.
So, let’s take a look.
BAC is a heavy weighting the in financial sector, with index tracking fund XLF, as a good vehicle for analysis.
That ETF just printed an all-time high this past Friday.
Financials XLF, Daily
Friday’s Fed announcement could be a significant infection.
Of course, the media is all aboard with a September cut, providing endless opinions on how to trade something that has not even happened.
What we’re looking for on this site, is some evidence of a reversal. We’re looking to see if price action stalls in not only the XLF, but the other major sectors as well.
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The Danger Point®, trade mark: No. 6,505,279
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