XLF Financials ETF Weekly Chart; Banks Hammered -5% the Week of 3/18/19 Collapsing Into Correction Territory; Expansion (Megaphone) Pattern

The banks are puking their guts out blowing two chunks over the last three weeks. Last week, XLF, reflective of large banks, insurance companies and other financial companies, crashes -5% and is now down -14% off its peak in correction territory. KRE, the regional banks, crashes -10% and is down -23.4% off its top now in bear market territory! Comically, the Wall Street pundits have been hyping the banks for over a year's time; all they did was lose money for anyone that jumped on their broken bandwagon.

That red candlestick from last week is an outside reversal. Price made a higher high than the prior week and then ended up closing below the low of that prior week. This portends weakness for the weeks and months ahead, however, sometimes another near-term spurt occurs to log a higher high, say a few weeks out, and then roll over again for the intermediate term (IT). The red lines show how price made a higher high last week but all the indicators negatively diverged showing that the move higher was out of gas, and a smackdown occurs.

The 50-week MA ceiling at 26.46 spanked price lower to the 20-week MA at 25.47. Thus, the 25.47 pivot tells you a lot going forward. The selling volume for the two sell weeks over the last three weeks is large. Many investors said they are done waiting for banks to rally and are cutting bait.

The purple lines show the expansion pattern occurring this year and the blue lines show the expansion pattern, or megaphone pattern, over the last 14 months. If you extrapolate out for later this year into next year, the lower rail of that megaphone is at 17-19. This will likely occur as the US drops into and wallows in economic recession. XLF likely has a lot of sideways chop ahead with an overall slow downward bias. The 22 level is key long-term support. If that fails, look out below. Keystone's 80/20 rule says 8's lead to 2's and 2's lead to 8's, so a failure at 22 will open the door to 18 which jives with the lower target of that IT and LT megaphone.

JPM loses -6.4% last week. CEO Jamie Dimon is crying in his cafe latte. GS -4.7%. BAC is down -7.8% last week so they are keeping the kitchen knives away from Warren Buffett. The Oracle of Omaha sure is great at losing money. C -6.5%. WFC -4.6%. The Wells Fargo stagecoach just ran over Buffett's wingtip. Thump, thump. USB -7.3%. BK -2.7%.

The weakness in the banks created much of the weakness in the broad stock market late last week. Keystone does not own any bank trades long or short right now. 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.