The KRE (Regional Bank ETF) Active Short Trade & Short Setup has been consolidating over the last week or so in what appears to be a bear flag continuation pattern. If/when prices break below the pattern, we are likely to see a relatively swift move down towards the neckline of the aforementioned Head & Shoulders topping pattern on KRE. click here to view the live, updated chart of KRE
KRE daily July 31st
On a related note, I had recently mentioned my observation of several increasing bearish developments within many of the key components of the XLF (Financial Sector ETF). I find it a bit less than coincidental that these bearish developments are coming at a time when Argentina has decided to default on their debt as well as the recent implosion of the Portugese mega-bank Banco Espirito Santo. Funny how quick the mainstream & Wall Street pundits are quick to dismiss these as isolated events, likely to not have any spillover into the rest of the financial markets…. all very late 2007-esque IMO. Regardless of whether these incidents prove to be isolated, contained events without any spillover or ripple-effects into the financial system (hint, hint… keep an eye on junk bonds ‘JNK’ and credit spreads), here’s the updated chart of XLF with a key support level to watch and some downside targets for if/when prices break below that level. click here to view the live, annotated chart of XLF
XLF daily July 31st