I am very vocally bearish on financials for the long term. I think they are the cancer of the US economy. Monetary policy over the last 20 years have allowed for, encouraged in fact, the economy to become financially top heavy. I could go on a rant (and have many times in the past regarding financials) but I will not. I am very long term bearish, and I will leave it at that for the moment.
Here is my P2 count for financials. I think P2 is done for the sector. There is a possibility that the action the last 2 months was an X wave and now working on Z of P2. If this is the case, then I don't think it will make substantially higher highs. In fact I would expect it to make what amounts to a double top.
But there is a difference in being long term bearish and recognizing the possibility for a near term upside move. And I think there is one. Here are the two basic scenarios that Gumbo and I see (we have been discussing this recently)
- (binve scenario): We are in Minor 2 up of Int 1 of P3. Next wave up is a Minute C of 2.
- (Gumbo scenario): We are in the final wave up of Int Z of P2. It will make a slightly high than Oct high
So the way I am playing this: I am waiting for the move within silly season to run its course and will be establishing a long term short position in XLF probably in early January. This will be a "short it and forget it" type position.
