XLF Financials ETF Daily and Weekly Charts; Rising Wedges; Overbot; Negative Divergence

There is something about a Saturday late afternoon early evening and the blues. Country Road by John Mayall. Can you dig it? The large money center banks and financial institutions are topped-out with negative divergence (red lines). Price continues higher as the chart indicators slope lower, negatively, so price will need a spankdown, and so it begins. The banksters will likely lead the broad market lower going forward.

The XLF daily and weekly charts have the same vibe. The red rising wedge patterns are bearish. The red lines show universal neggie d across all indicators for both the weekly and daily time periods. She's toast.

On the daily, price collapses to 53.07, deciding to sit on the important 20-day MA at 53.07, and spend the weekend thinking things over. XLF must bounce, or die, from 53.07. The 50-day MA is 52.67 so watch that support. Watch the RSI and stochastics to see if they stab below 50% into bear territory forecasting continued trouble ahead. Price was a hair away from tagging the upper band at 54.38, it is close enough for gov't work, but XLF may want to try and grab that 54.38 early in the week before it drops in earnest. The expectation is that price will simply continue lower from here.

The ADX on the daily is below 30 for months so there has been NO strong upside trend in XLF on the daily basis for the last half-year. The daily chart is ugly and very bear friendly. The Aroon, for both the daily and weekly charts show that all the bulls expect XLF to go up forever and comically, nearly all the bears also expect it to go up forever. This is a contrarian indicator verifying the uber bullishness, complacency and rampant euphoria in the banks currently. The Uber driver told Keystone that he took an entire paycheck and bot XLF last week and this week he will buy JPM and GS.

The XLF weekly chart is another piece of crap like the daily. Full-blown neggie d so price needs to receive a multi-week smackdown and that has likely just started. The pink box on the ADX shows that XLF was in a strong trend higher during 2024, during the price rally higher, but that petered out in March of this year and the ADX drops into the basement signaling that a strong trend higher is no longer occurring for the last half-year.

Note the volume candlesticks on the weekly showing the 4 distribution weeks since June (blue circles). That is the smart money sloughing off shares to the dumb money, the bag-holdin' sucka's. It's fun. Anal-cysts appear on television telling you to buy, buy, buy, the banks while they are sneaking out the back door selling the bank shares on the corner. 

The banks will likely lead the stock market lower; the XLF and SPX charts are all in neggie d. This is expected to be a massive top right now that is about to implode. The XLF charts above are the large money center banks and the corrupt insurance and reinsurance companies. What about the KRE; the regional banks? Let's take a look.

The KRE weekly chart price is almost, just a whisker away, from matching the high from late last year, perhaps close enough for gov't work, so the chart would be in full neggie d like the XLF above. The KRE daily chart is exactly as the XLF above so it should be spanked going forward. If the reason that traders like the banks is the wider differential in yield spreads as stagflation deepens, so they can make money on loans and other products easier, it is not reflected in the regionals. The XLF and KRE charts are both turds requiring multi-week, and longer, pullbacks.

Keystone is not long or short the banksters right now but obviously the play forward is shorting the banks. Cover the children's ears for this scary statement. The XLF and KRE monthly charts are in full neggie d, like the SPX, reinforcing the forecast that stocks, and banks, will roll over now and trail lower for many weeks and months, perhaps a year or few, ahead. Plan accordingly.

Keystone is the only one sitting on a lawn chair on one side of the boat. Everyone else is on the other side of the boat, they took all the deck chairs, and they are partying without a care in the world. The boat feels like it is starting to rock back and forth. Sheryl has not had much good stuff in recent years but The New Normal is a new one that is dropping and it is a catchy groove. You're gonna wake up some day, to a robot that's in your place, like all the predictions say. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.