With the addition of the WFC short entry today, there are now three Active Short Trades in the financial sector: FAS/XLF, BRK.b & WFC. This market has been unusually difficult to trade lately, both on the long & short side, due to both the recent very choppy price action as well as the fact that the broad market (S&P 500) has basically gone nowhere since the beginning of the year. As of today, the SPY & QQQ have exceeded the upper-end of my expected bounce ranges with the volatility indices ($VIX & $VXN) pulling back in more than expected before reaching my next upside target.
Bottom line is that the market has been very tough to call lately, at least for me, and so I’m keeping position sizing light for now but will continue to post what appears to be any objective trade setups or notable technical developments as they occur. As always, DYODD and only take (or pass) on trades that you feel comfortable with. With that being said, here’s an overview of the financial sector (XLF) along with several of the top components.
XLF (Financial Sector ETF) is currently backtesting both the more recent bearish rising wedge pattern (yellow) as well as the primary uptrend line generated off of the Oct 2011 lows. XLF/FAS remains an Active Short Trade and also offers an objective new short entry or add-on here on the backtest. The stop for the FAS/XLF short remains a close (not an intraday break) above the recent highs.