XLF Update: June 5, 2012

~reposted from pebblewriter.com

Financials play a pivotal role in the markets.  They led the way as they enabled the previous run-ups and bubbles, and they led the way down when the house of cards was revealed for what it was.  The survival of nearly all markets is hanging by a QE thread, so we'll take a fresh look at XLF to see what the charts are saying.

We'll start with the weekly chart going back to inception in December 1998 -- lot of water under the bridge with this ETF.

Fortunately, for us analyst types, it's been very amenable to chart patterns and Fibonacci analysis.  Consider this chart, that helped me call a top in banking stocks in late March [see: End of the Line and Lots More Where That Came From.]  Note the well-defined channel and the Gartley Pattern reaction at the .786 Fibonacci level.

I've put together a series of charts that, I think tell a pretty compelling story regarding XLF's future.  For more, go to pebblewriter.com.

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Oil's Balancing Act

~reposted from pebblewriter.com

Like many stock indices and currencies, Crude Light (CL) is at a critical stage.  It reached 114.83 after breaking out of a diamond pattern in April 2011, only to back test the diamond six months later at 74.95.  It then retraced .886 of that plunge, setting a lower high of 110.55 in February before plummeting once again as low as this morning's 81.21 (the .886 is just below at 79.01.)

At current prices, CL is supported by fan lines from both 2009 and 1998.  A break could send it tumbling to $50 or lower.  On the other hand, QE is clearly on the table -- with all its asset-inflating implications.

In short, CL now balances on a precipice, where a move in either direction is likely to be huge.  On pebblewriter.com, we examine why -- and which course is more likely.

...continued on pebblewriter.com...