Bonds and XLF

XLF has been down 5 months in a row. And yet long term support continues to hold. For most of the year that was at the 1HP. After dropping lower at the end of June there were buyers at the YP. While I think better to position in strength (currently IWM & XBI, then QQQ & SPY, then think about other things) right now this is set for a bounce.

7 21 XLF D.png

The 2-10 yield curve has been getting a lot of chatter recently, and under 30 bps it probably should. 

On 5/20 I posted 'bond bounce' due to several factors, including the near tag of YS2 on the ZB continuous contract. But now it looks like it is about to go the other way - YS1 tag and HP resistance. TLT should drop back down. This will alleviate yield curve concern and XLF will get a bounce. 

ZB1 cont contract

7 22 ZB1.png