An Inverted Financial Crisis

A little over 9 years ago the selling in financials was so bad that the SEC banned short selling of all financial stocks.  Yesterday the buying was so good $XLF, the financial ETF,  hit a new record high and continues a breakout over 10 years in the making.

What a complete difference 9  years can make.  The recovery off the lows in 2008/2009 has been enormous.  And despite the positive momentum and continued Central Bank support, many think this market is closer to a collapse than to breaking out to even higher highs.

Anyone who was trading back in 2008/2009 likely did not see a market 100's of % higher in less than 10 years.  Or financial stocks soaring to never seen before heights.  Yet here we are.  And what if.... yes what if... we are still in the middle innings of this historic bull market.  What if that key $SPY breakout we got in 2013 is what we are getting with $XLF right now?

Are we going to see another 75% - 100% of upside for $XLF over the next 3-4 years?  What are the implications of that move for the broader indices?

With stocks at record highs I think more are apt to wonder when the next collapse is coming, rather than looking at just how much further this market has to go.

With unprecedented Central Bank intervention, why would we expect anything less than an unprecedented bull market.  One the likes of which the world has never seen before?  We are already seeing in with the record low volatility.

Before 2017 began I mused, with markets at record highs, that we should expect more record highs in 2017.  That the:

"march to record highs should continue unabated in 2017"

The Utopia Moves From Coach to First Class

Thus far in 2017 it's been a record high fest.  And despite all of this, the cries from the Uber bears remain.  Every reason they give for why this market should collapse is exactly the reason why it continues to rally.  Stubbornly slow growth.  Every headwind under the sun.  Low inflation.

Yesterdays rally to record highs came on a terrible day for the country.  We had the worse mass shooting in the history of the country.  Terrible.   There is nothing positive about it.

But for anyone trading the market, ugly domestic violence does not mean the market should pull back.  I saw a lot of talk about how the market was up on such a terrible day.  Terrible day it was, but the market doesn't care about too much these days.  And that in itself is telling.

While small caps broke to another record high, and have been soaring since the election, financials look ready to take the baton and move this market even higher.

This weekend AIG, the poster child of the financial crisis,  had its training wheels taken off.    Ride AIG , RIDE!  Eight years and AIG is on its own.  Judging from the recent record break for financials AIG is likely has quite a bit more room to go before the next financial crisis.


Let's get into some charts:

Bank of America has formed a wonderful bull flag.

How about $JPM?

New all time highs yesterday and breaking out of a wonderful bull flag.  There was some October $104+ call action last week.  Triple digits looks to be in the cards for $JPM

And how about $C?   The chart looks strong for more upside.  And options are positioning for more upside.  Recent option action positioned for a move back to $100 in the next year.

Nine years ago the market was in the midst of a nasty financial crisis.  Liquidity was drying up, financial conditions were tight.  Today we sit on the opposite side of the spectrum.  It's an inverted financial crisis.  And while many look at the gains for 2008/2009 and say the top is near, this surely can't go on.

I look at this market, and the unprecedented action from every Central Bank in the world, and I say unprecedented Central Bank  Action is resulting in an unprecedented bull market, one that mirrors no other, and like the actions of the Central Bank, one that has no comparison.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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