The following Short Trade Ideas have all exceeded their previously suggested stop criteria and will be moved from the Active Trades to the Completed Trades category: JASO, MU, STT, C, & FITB. There are several other trade ideas, both long and short, that have not exceeded their suggested stops but may be removed soon to make room for new trade ideas that offer better R/R profiles at this time. The AVL long trade also recently moved below its previously suggested stop level and will also be removed. (The AVL stopped out trade will also be covered under a separate post, assigned to the Completed Trades- Long category for archiving purposes.)
In reviewing the current active short trades, I noticed that I had incorrectly typed 61.60 as the suggested stop on the previous update to the C short trade. My intention was to list the stop on a move above 51.60, where the red horizontal line on that last daily chart comes in. I’d assume that anyone who took the trade probably figured that out when viewing the chart but if not, I wanted to share that level and although this might be too late for some (my apologies if so), my preference is to see an close above that level in order to trigger the stop. C did manage to trade as high as 52.10 early today but has since fallen back below that resistance level. Again, the preferred stop for C is a daily close above the 51.60 level, which may or may not happen today.
Regardless of the relentless bid under the market lately, the Too Big To Fail banks still look bearish from a technical perspective at this point. Although the current divergences and bearish price patterns can & will be negated should prices go much higher, at this time these key financial stocks have not yet reached that point (of undoing the bearish technicals).
I realize that the will of most flexible/short-side traders has been broken lately with the markets powering to new highs on a near-daily basis in spite of bearish chart patterns and divergences. There are times where technical analysis simply doesn’t work and usually that happens to bullish patterns during a downtrend and bearish patterns during an uptrend (as is currently the case). Therefore, one should be very selective with any short-side trades until we at least return back to a short-term downtrend once again. At this time, the trend on all major time frames (long-term, intermediate-term and short-term) is clearly up.
With that being said, I always strive to keep both long and short trade ideas on the site as even during a strong trend, some traders or investors might be looking for counter-trend trades to hedge their existing positions or maybe an aggressive trader is looking to position in front of what could be a sudden reversal. As I plan to continue to remove many of the existing short trades that no longer look attractive, I am going to add all 4 of these stocks as Active short trades at current levels with stops & targets to follow asap. Essentially, the stops will be very tight as these stocks are approaching the upper-limits of where the bearish technicals will become undone. For example, if prices were to make a solid move back inside of a bearish wedge or the MACD and RSI both take out their downtrend lines. Therefore, in spite of “the trend that just won’t end”, I view these 4 stocks to be objective short entries here with the appropriate stops in place. Objective should not be confused with a high probability of success. Rather that the expected measure of loss, if wrong, is more than outweighed by the potential gain on the trade, if correct. With BAC, for example, I’m looking for a 30% correction from current levels but my stop will be less than 10% overhead. Updated daily charts of JPM, BAC, C, & WFC:
… but not too big to short. As a follow-up to the recently posts on the XLF short trade, here are the updated charts on the major TBTF banks; BAC, JPM, C, & WFM:
Two weeks ago I had stated that a correction in the banking sector was likely as evidenced by the bearish charts of $BKX (KBW Banking Sector) as well as a few of the heavy weights of the financial sector, BAC, C, and JPM. At the time, JPM was the only one of the three which had already broken down from it’s bearish rising wedge pattern but since then, BAC and C have also clearly followed suit and although they are getting close to my first minor support levels, which may or may not produce a decent bounce, I believe that the charts continue to indicate significant downside over the upcoming weeks and quite possible months. Of importance to watch is the $BXK, which is quickly approaching that key uptrend line shown on the last weekly chart (which is the bottom of the wedge pattern on this updated weekly chart. A break below said uptrend line would likely bring the $BKX back to the 43 level, taking the banking sector back to levels not seen since June 2012. Previous & updated charts:
I’m considering shorting some of the large bank stocks but I’ll just share these charts as “unofficial” trade ideas for now, possibly adding them as soon as I clean up the Active Short Trades category. I’d like to cull out some of the Active Shorts that may not have triggered a stop yet, many of which are even profitable but just not offering as good a risk/reward profile at this point as I’d like to see. Therefore, I plan to remove some of those trades soon to make room for some new short ideas that offer a better R/R profile at this time.
Here’s the weekly chart of the $BKX (KBW Bank Index) along with the daily charts of three of the largest TBTF (Too Big To Fail) but not too big to short (or drop in price). TBTF means that the US Gov’t will do whatever it can in it’s power to keep the doors open and lights on at the banks but in no way (contrary to the widely held belief of the general public) does this mean that the stock price of these banks is immune to significant losses and even the possibility of a total loss, should another financial crisis occur in the future. GM is one of many examples of this. The Gov’t essentially bailed out GM and kept the lights on for the company while the GM stockholders, prior to the 2009 bankruptcy, were wiped out. The GM shares that trade today were NEW shares from the post-bankruptcy company and the previous stockholders were not compensated or given any stake in the new company. Anyway, I’m not predicting any major collapse of the bank stocks, at least not at this point in time. Just looking for a likely 15-20% drop (possibly more) from their recent highs. $BXK weekly chart followed by the daily charts of JPM, BAC, and C:
I’ve put together a comprehensive video analysis of the S&P 500 index including technical overviews on 22 of the largest components of the sector, similar to my recent $NDX/QQQ top 10 holdings video. I do have to warn you that at 39 minutes, this is my longest video yet. Therefore, this is my gift for you insomniacs, masochists and those who are gluttons for punishment. All kidding aside though, if you don’t want to sit through the entire video you can skip to the sections that you might be interested in. The video starts with an overview of the $SPX beginning with the monthly charts, weekly chart, then the daily time frame (plus the targets on the SPY daily) and then goes on to cover the following stocks in this order: XOM, AAPL, MSFT, PG, IBM, GE, JPM, BAC, T, CVX, BRKB, CSCO, KO, PFE, GOOG, INTC, MRK, HPQ, WMT, C, ORCL, PM.
Some of these stocks are active trades on the site while others look like objective trades at current levels as well. To view the video, click the link below to where it will open in YouTube. As always, make sure to select the 720p HD playback quality setting and “Large Player” or “Full Screen” size for optimal viewing quality.
when i look at XLF (financial sector etf) and it’s components, i see tons of bear flags and bearish pennants on the daily to 60 minute frames. here’s some 4 hour charts and several XLF components. i’m aware that the last few days have had an underlying bullish tone, with the markets rallying into the close to recoup losses and close green but this is something to keep an eye on for now IMO.