Previous Analysis: “Why The Banks Will Thrive“
Do Not Chase Here
One thing I don’t EVER do, is, chasing stocks when it is soaring; there are many dumb sayings in the financial world, but this one is true, “do not chase stocks, ever!”
So this is where most traders have proclivities to chase for ‘fear of missing out (FOMO)‘, but trust me, you are not going to miss out anything when this thing turns hard & fast, and it will. I am not calling tops here, because, that, no one knows, and it may very well continue to grind higher. But this is NOT the level for an entry unless you are day trading this.
Turn This Into A Great Setup
For my trading style, this could turn into a great setup possibly early next year looking at the weekly-charts below. So let’s be patient, and wait for the setup to play out, instead of chasing that high up here and lose sleep. But what if it goes up forever and to the moon and never pullback? Well, then, we let it go! =)
But one thing we won’t do is, chase it up here.
We are currently running on empty with extreme overbought (“sell zone“) condition on our Relative Strength Index (RSI) indicator. Again, this does NOT mean it’s going to roll over right here, right now, especially this being a weekly-chart, it may take some time to resolve itself.
In the below charts, I have depicted possible level for an entry, but that may differ depending on the situation in the next 1-2 months. What I would really focus on is the RSI level, I need that RSI to reset back down to oversold (“buy zone“) condition, and it will, all in due time (I don’t see it happening in this month though).
So I will be watching XLF BAC C for the next setup. You will be glad that you patiently waited for the setup, when the fear grips in into the financial sector, that’s when we will be buying.
Study below charts and strategy it, and wait for the right moment.
Disclosure: I currently do not own any of the stocks mentioned at the time of this article