Don’t Get High on Your Own Overhead Supply, Part I.

The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out). which I published for members and 12631 subscribers this past Sunday. 

The monthly charts for the sector ETF’s of both the financials and homebuilders were presented in Strategy Sessions earlier this year. The thesis was to expect both sectors to pause as major prior price levels, dating back several years. 

First, the financial sector ETF, on the daily timeframe, shows a recent uptick in buy volume as price has held above the light blue line, which was prior resistance.

Now, that light blue line seems relevant on that daily chart. But when we update the monthly chart, you can see just how important it truly is, dating back over a decade in significance. However, that $20 area will be argued by bulls as having been “worked off,” via several months of sideways action this year. 

Given the uptick in buy volume I described above on the daily chart, combined with the tightening price action over resistance, the potential for a further rotation into financials should be respected.

Some of the more attractive names technically headed into this week, including the regionals, are: BPFH C JPM MS STI STT.

Goldman Sachs continues to pose as a key tell for the next move in the banks and broad market. The weekly chart bearish rising wedge, since 2011, which we previously had discussed, is incredibly still in play despite the past several weeks of rallying–You can see price “running along” underneath the major support trendline, still (barely) breached.

Any further strength, though, likely renders the entire wedge thesis to be null and avoid, projecting a move well over $200.

For Part II., Please click here to continue reading