Financials (XLF): Stuffed Like Lehman's "Level 3" Book

We wanted to stay clear of the Luskin, Gartman, triple bullish Deutsche Bank buy call on the US Financials, so we advised you to do the same. Predictably, the bullish narrative rolled into to the Financials right at the goal line, then ran head first into a Canadian Football League goal post.

The goal line for the consensus crowd is the 50 day moving average (see chart). I don't use the 50 day to make capital decisions, but it's important to watch behavior around that line. It’s kind of like watching pigeons flock to bread crumbs.

The XLF was down -6.3% today, going out at 21.07. If this US Financials index breaks my support line at 20.58, and closes there, I see 23-24% of expeditious downside.

KM
(chart courtesy of stockcharts.com)