prices gapped below yesterday’s re-drawn bear-flag on the XLF 60 minute chart which should portend more downside. however, the day is very young and i can almost feel the fed’s heavy hand in this market so be careful. personally, i only have one long hedge left right now and will probably remove that soon but i still a have decent amount of dry powder to add to more shorts which i may do here soon. some of my favorites remain the financial stocks that i posted as flagging on friday as well as some of the brokers covered in the recent investment brokerage video like SCHW and AMTD. the REIT’s also continue to look attractive on the short side (short IYR, long SRS, or DRV, or you could short one of the leveraged longs for the added decay, like DRN but remember to adjust your position size accordingly not only for the inherent volatility in that sector but more so to account for the leverage. however, the risks and return potential of trading anything right now is much higher than usual (larger than usual gains or losses) so if you are not experienced or comfortable with trading this type of market, there is nothing wrong with going to cash and watching from the sidelines. i continue to think that the potential for a very sharp decline is elevated right now so be careful, don’t get married to any one position, long or short, and be careful what you take home over the weekend.