XLF Financials Daily Chart H&S Patterns

Keystone's trading algorithm, Keybot the Quant, has the ability to identify what areas or sectors of the markets are affecting market direction the greatest amount at any point in time. Financials are the key metric right now. Watch XLF 21.82 and price fails under this morning which creates the broad market weakness. If XLF recovers above 21.82 then equities will float higher again. The 20-day MA is 21.82 so this creates a confluence of resistance for price. The 50-day MA is 21.96 also serving as resistance.

The negative divergence on the RSI spanks price lower three days ago but the other indicators remain on the long and strong side. Note the high print in money flow. So price may want to come back up for another look at the ongoing brown right shoulder at 22.20. Overall the theme would be sideways to sideways lower on the weekly and monthly basis forward. The large brown H&S pattern with 22.6 head and 20.5 neck line would target 18.4 if the 20.5 fails. The neon blue H&S with head at 22.6 and neckline at 21.7 targets 20.8 if the 21.7 fails, which it did three weeks ago. There are two juicy gaps down there at this 20.6-21.0 lower target zone.

Projection is additional sideways staggering but the sideways lower bias should kick in on a more steady basis going forward in the short and intermediate term. The XLF 21.82 bull-bear level identified by Keybot is important so use this as a gauge on market direction. Equity markets will have difficulty moving higher (a ceiling will be placed on the upside) unless the bulls can push XLF above 21.82 and move it higher. The XLF is currently printing 21.74. 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.

Note Added 11:11 AM: XLF is very ill today now down to 21.70 exactly at the neck line. Time to bounce or die. Are the banks ready to perform a header off the side of the cliff at 21.70 which would target 20.6-20.8? Or will they bounce higher to play around at the right shoulder a while longer?.

Note Added 3:58 AM on 5/7/14: XLF collapses to 21.59 as the day played out providing bear fuel to send equities lower.