XLF Financials ETF Daily Chart; Upward-Sloping Channel; Overbot; Negative Divergence

The banks are key after the Federal Reserve drama yesterday. Chairman Powell professes more dovishness and stocks popped, but then dropped. Traders are concerned that the Fed sees a slowing economy. Typically, stocks rally big since the free Fed candy flows into equity prices. The banks have recovered the losses from Q4 with that sharp "V-shaped" recovery.

Keybot the Quant algorithm remains bullish these days and appears most focused on banks. Keybot identifies XLF 25.94 as a key line in the sand. Price begins the Thursday trading session at 26.14. The XLF is at 26.00 in pre-market trading. The stock market will likely take a leg lower if the XLF loses the 25.94 level. The bulls will continue partying like its 1999, as Prince would sing, if the XLF remains above 25.94.

The two-day spankdown in the XLF is severe from 27.1 to 26.1 a one-big-figure drop; -3.7%. It was a gap-down move yesterday so the banks were being sold off on Tuesday before the Fed decision and Powell presser. It is not surprising since the XLF prints a higher high in price but all the indicators are neggie d (red lines) so the top was in. The stochastics were overbot.

Price also violated the upper standard deviation line so a move back to the middle band is needed and achieved at 26.34. The lower band at 25.83 remains in play. This forms a confluence with the 50-day MA at 25.87 so this 25.83-25.87 may create a magnetic effect on price (pulling it down). Check out those tight bands (pink). There is a big price move at hand, perhaps it is this down move that has started. Bulls need to reverse this drop fast, within the next couple days, otherwise, XLF will likely fall like a rock. Tight bands only predict that a big move is coming but do not predict direction (the big move coming can be up or down).

The 150-day MA line is sloping down showing that the XLF fell into a cyclical bear market in October and remains there. The banks are ill. The cyclical bear market will not end until the 150-day MA slopes upwards, and this will only occur if price is above the 150. Price is now below the 150 so it will drag the 150 lower maintaining the cyclical bear. The XLF is at the bottom rail of the upward-sloping blue channel so a little bounce may be in order, however, considering the negative divergence spankdown occurring and ongoing, several more days of down would be expected.

Bulls need the XLF to remain above 25.94 and heading higher and for the 150-day MA to start sloping upwards. This will lead the stock market bulls to the promised land of joy and happiness. Bears need the XLF to fall through 25.94 which will begin a down leg for the US stock market and usher-in sadness and despair. The low put/call ratios and low volatility verify the ongoing market complacency and uber bullish joy (which typically resolves with a stock market selloff). 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 8:45 AM EST: The XLF is trading at...... wait for it....... 25.95 in the pre-market. Let the festivities begin. It is time for the banks to bounce, or die, and those corrupt banksters will take the broad stock market in the same direction.

Note Added 9:17 AM EST: The XLF is trading at 25.99 in the pre-market. The regular US trading session begins in a few minutes.

Note Added 9:38 AM EST: The XLF is trading at 25.94 eight minutes into the trading day. Typically, you want to see the failure to remain in place for 6 or 7 minutes to lock it in. XLF is under 25.95 for 4 minutes. Interestingly, the major stock indexes turn green with upside joy. The banks say otherwise. Give this a couple more minutes. XLF is at 25.88 and remaining below the critical 25.95 bull-bear line in the sand.

Note Added 9:43 AM EST: The XLF is trading at 25.88 which locks in negativity. No one told the stock market that remains green. With the weakness in banks, XLF below 25.95, stocks should roll over to the downside. Watch this key XLF 25.95 level today.

Note Added 4:36 AM EST on Friday Morning, 3/22/19: The bears made a noble attempt at sending the stock market lower by creating negativity in the banks yesterday but that was short-lived. XLF jogged above and below the key 25.95 level and at 10:55 AM EST exploded higher ramping upwards the remainder of the day. At the same time, the semiconductors rocket launch higher so with banks and chips on their side, the already-euphoric traders took the party to a whole new level of nirvana and joyous ecstasy. What could possibly go wrong? With the big up move in stocks, it is surprising the VIX does not have a 12-handle. The CPC collapses to 0.77 and CPCE down to 0.51. The low put/call ratios verify the ongoing uber complacency in markets. Traders are not buying downside protection and have no interest in doing so; they are convinced that the global stock markets will go up all year long on central banker largess. As that famous scholar Alfred E. Neuman says, "What? Me worry?" Get out of any of your short-term long plays. Stocks should experience a strong down move any time forward. Keystone is getting beaten-up on some near-term index short plays over the last few days as stocks chop sideways. Traders need to be brought back down to earth from their euphoric perch. It has been one heck of a party thus far this year. Watch XLF 25.95 like a hawk; it is steering the stock market ship currently.