Sector Rotation-Really "Where the Money is Going" XLF,UYG and SKF

I believe in using Technical Analysis to put the probabilities on your side. This means the more independent confirmations you get, the better the probabilities. Lets look at the financials as they have been the epicenter of this entire debacle. We'll start with XLF and then its ETF derivatives.

Even though the market has been moving up (at least this week) XLF is in a lateral trend. If it were not for the market's stance, XLF would have already sank. You can see 2 days of breakout new highs-(similar to what the market did this week-and the market has the same negative divergence). Usually the 3rd divergence sinks the boat as in this case. XLF is forming a triangle top as well, If it were to breakout of it, it would have done so with the market.

UYG (ETF Ultra for XLF) looks very similar, 3C shows it is under distribution. Second confirmation.

SKF Ultra Inverse ETF for XLF) look at the size of the leading divergence in 3C-Volume also is showing a rounding bottom typical of accumulation. 3rd Confirmation.

A different formulation of 3C shows an even bigger positive divergence (accumulation). You can see in Feb/March the negative divergence that forecasted the decline in SKF. 4th confirmation

Here SKF the inverse ETF Ultra for XLF, is forming a triangle bottom-typical price formation for stocks under accumulation. Not only is 3c in a powerful leading divergence, but TSV 55 has also formed a positive divergence. The two day break below the triangle is very common to see right before a breakout; it shakes out stops and pulls in shorts to add more fuel to lift off. Compare this to the market, it should be in a serious downtrend, but it is not, this is accumulation. 5th confirmation (TSV 55 divergence/Triangle base)

Again, SKF-but this accumulation/distribution/confirmation indicator (pink) which has an excellent track record for forecasting like 3c, is written completely different so it shares no similarities with 3C in it's constriction, yet again, it shows huge accumulation. The MACD Heat Map also is showing no more downside momentum, it's actually positive. 6th confirmation.

Finally comparing SKF's opposite-UYG you can see the indicator did an excellent job of following price (confirmation) until it signaled a negative divergence at the October top. Now it is in distribution mode. 7th confirmation.


I could post 100 charts, they all say the same-money is flowing out of XLF and it's derivative ETF's into SKF and Financial short ETFs. From the triangle and two day break below, I'm guessing we are very close to a reversal. I can see SKF above $100. From the size of the base and accumulation, I think $175 is a reasonable eventual target