Friday, August 5, 2016

Watch the U.S. Financials:

Just to refresh - the term Bellwether – was derived from the Middle English Bellwether which refers to the practice of placing a bell around the neck of a castrated ram – (a wether) in order that this animal might lead its flock of sheep. Just to refresh - no bull market can operate without the leadership – or participation from the financial sector.

Just to refresh – on the bullish inverse head & shoulder (H&S) formation. Bigger is better – so yes a daily bar an inverse H&S is good – but a larger weekly bar inverse H&S is better. Also the first or left shoulder should be longer in duration than the right shoulder and the volume is usually greater on the left shoulder – sometimes the head has the most volume but never the most volume on the right shoulder.

Two charts today – a daily bar of the SPDR Financial (XLF) displaying a small inverse H&S and a weekly bar of the SPDR Financial (XLF) displaying a large inverse H&S – clearly very bullish for the broader U.S. equity markets. 

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