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Tuesday, January 5, 2010

Financially My Dear I Don't Give a XLF

LOL! Holy Bad Puns Batman! Even I admit that was too far of a twist on the classic quote. But bad puns are about the only thing rattling around in binv's brain, so cut me some slack! :)

On Dec 20, I wrote this post: Do You Smell Something?

I stand by all of the big picture rhetoric that I was spewing:

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 I also added this tidbit and this chart:

But there is a difference in being long term bearish and recognizing the possibility for a near term upside move. 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.

So I would like to check in to see how the short term played out. Here is the count today:

Right on track. I had the termination of the Wave at the end of the year, but 1 week off during silly season isn't too bad.

The move is looking nearly complete. I think we will have a little bit of consolidation and then one more spike up to about 15.10 - 15.20.

That is the area where I will be putting some long term money down on some XLF shorts. And I will probably also play FAZ for a swing trade (2x and 3x vehicles are *never* investments. Making early calls like I have with Caps points and letting them run is one thing, but never with real money)

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