The Financials: FAS vs. FAZ

[XL-entLady]

XLF Bias Depends on Time Frame



By Bill Luby, 3/18/09

Lately it seems as if the financial sector is the market. For this reason, I now watch the financial sector SPDR (XLF) and the KBW Bank Index (BKX) tick by tick, in addition to a handful of financial stocks that seem to be in the most peril on a particular day.
In my opinion, however, XLF is the best way to capture the full extent of goings on in the financial sector, from banks and brokerage houses to insurers and consumer finance companies, XLF pretty much covers the waterfront.
The chart below captures the last six months of action in XLF and highlights the problem facing XLF and the broader markets at the moment. Stocks are overbought in the short-term and oversold in the long-term.
Rather than use oscillators to show how overbought and oversold stocks are, I generally prefer to rely on a combination of moving averages and trend strength indicators, with volatility as an important secondary indicator. Looking at the moving averages, XLF is now well above the 10 day MA and running up against resistance in the form of the 50 day MA. In terms of trend, utilizing the Aroon indicator to measure trend and breakout strength, XLF is bullish in the 10 day calculations, but bearish from a 30 day perspective. In this chart there is not much to see in terms of volatility, but by tracking in the upper half of the Bollinger Bands, XLF generally has positive short-term momentum, while proximity to the upper band suggests a reversal is likely soon.
So there you have it: bullish momentum triggering buying on the part of the trend following crowd, while overbought indicators have the swing trading crowd ready to get short. Such is the current state of the market. The direction in which you lean is more likely to be a function of the time horizon of your analysis than any other technical factor.

[source: StockCharts]

Disclosure: Short XLF at time of writing.

http://www.greenfaucet.com/technical...-horizon/98485


Lady

[JTH]

60 Minute chart for those of us loving on some FAZ

Attachment 43

[JTH]

Looking at the charts (like I do anything else) I'll be somewhat encouraged if FAS closes under 6.00 & FAZ closes above 30.00

Shoot for the moon, ask for the stars...

[JTH]

Let the epic battle begin...

FAS dressed in green

FAZ dressed in red

FAS is handed the ball with a spike in volume...

FAZ takes a hit, but the ground is pretty soft when you're only four foot tall...

Attachment 69

[JTH]

Please DELETE

[JTH]

Our friend the FAS might give us a, HOURLY cross-over sell signal on the ADX. Although it may cross over today, I myself wouldn't call it an official sell signal untill we get a stonger divergance (something like 5-10 points of seperation)

The FAZ chart's ADX is not telling the same opposite story, so something isn't lined up correctly.

Attachment 73

[JTH]

I got FAZed over @ 50... Lets get the FAZ out of here! This thing is FAZed up! I do admit, my technical numbers are a little FAZzy

I like to think that our badly beaten down FAZ is forming a base. A base of operations from which to plan its next attack on its evil twin brother FAS. Tech carried this rally while FAS was riding its back.

If I'm wrong, well it really doesn't matter because I'm in @ FAZin 50 and that was wrong! I can only continue to be wrong untill I'm right.

Attachment 75

[XL-entLady]

I agree, J! If FAS doesn't get a Geithner Goose, then FAZ might make it off the ETF Hospital's critical list.

Lady

[JTH]

You know considering all the hoopla about the mark-to-market and the G20, I think FAZ has held up rather well.

[etftalk]

Maybe - the XLF is up 3% and FAZ is down 9%. I guess that's just a daily typical swing and could be worse given the news. I am a little surprised that we didn't get a "sell the news" reaction since this was expected (I thought it was anyway).