Precarious Technical Setups In Financials
XLF (SPDR Financials ETF)-- During Friday's session we discussed the precarious technical setup exhibited by the Weekly XLF Chart, specifically the prospect of a weekly closing violation of the dominant up trendline from the March 2020 Pandemic Low. My attached Weekly Chart shows that XLF closed the week at 30.98, down 2%, well beneath the trendline. in addition, given the sharp negatively-sloped Weekly Momentum gauges (bottom of the chart), XLF is poised for downside continuation to test the October 2022 pivot low at 29.59 residing 4.2% below Friday's close, which MUST contain forthcoming weakness to avert triggering a new, intermediate-term downside target zone in the vicinity of 25 to 26...
JPM (JPMorgan Chase & Co)-- In a related technical setup in the financials, Friday, we also discussed the precarious technical setup in JPM as stock price weakness probed and tested the 200 DMA at 125.29 (see my attached Daily Chart below). JPM managed to close at 125.81, preserving its positive juxtaposition with the 200 DMA, for the time being. Monday will be another important session for JPM if the stock either successfully tests and lifts off from the 200 DMA, or breaks below the 200 DMA. Both scenarios will have a meaningful impact on the price behavior of the XLF (JPM represents 11% of the XLF)...
I will continue to watch and post my work on the banks Monday morning into and immediately after Wednesday's increasingly critical FOMC Meeting and Powell press conference. If XLF is pressing toward a test of its October 2022 pivot low, and JPM is trading below its 200 DMA along the way, the larger equity indices (especially the SPX) likely will be under pressure as well.
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More Top Calls From Mike
Eight weeks ago, Mike Paulenoff discussed the budding technical setup and upside breakout in CRWD (CrowdStrike Holdings) with our MPTraders members, writing:"CRWD has followed the bullish scenario we discussed in late August, and in fact, today (10/06/23) has thrust above 5 months of resistance to new recovery high territory at 176.32. Although my next optimal upside target zone is 190-200, the BIG picture setup points to 230-240 thereafter... Last is 174.86...
On Monday morning, November 13, 2023, a full 5 trading sessions before the approaching November Options Expiration (OPEX) (11/17/23), I posted my chart-based commentary for our members:SPY-- Considering that Friday is November Option Expiration, where are the "magnetized strike prices" as we start OPEX week? Based on my attached Hourly Chart, the magnetized strike price zone spans from 436 to 441. Should SPY take out the upside barrier of 441, then the follow-through outlier magnetized target could be as high as 450 before or on Friday.
On October 23, 2023, ten days before the November 1st FOMC meeting and policy statement, I posted the following commentary about the downward-spiraling TLT (20+ year T-bond ETF):My attached 4-hour Chart of TLT shows that the relentless and near-vertical downtrend that commenced at the beginning of August from around 100 hit a new long-term low at 81.92 this AM, positioning it in my intermediate-term optimal downside target zone from 80 to 82.
On the afternoon of September 25, Mike Paulenoff posted a warning signal to MPTraders members about the developing acute oversold condition in RTX (formerly Raytheon Technologies), writing:"RTX (formerly Raytheon Technologies) hit a new multi-month corrective low of 71.02, down 33% from the 4/10/23 post-pandemic High at 106.02. Although RTX has violated my optimal target window of 73-75, the stair-step corrective pattern off of the 4/19/23 high at 104.
On October 3, Mike Paulenoff posted the following "Heads Up!" about GLD (SPDR Gold Trust, ETF) for MPTrader members: "GLD has pressed to an important technical inflection window from 169.50 down to 166.30, from where I will be expecting corrective downside exhaustion off of the 5/04/23 high at 191.36, and new buying interest. From a nearer-term perspective, given the acute oversold but CONFIRMED Momentum reading of 17.16 an hour ago, my preferred scenario argues for another loop down that marginally violates today's low at 168.