Well all of the banks rallied when the news came out of a successful stress test. But what is more important is what is the larger picture of these banks as a whole. When going through all of the banks hourly charts, 16 of 19 are currently in an uptrend. The three that are not are, FITB, STI and COF. Only three, this tells you that financials have been strong for quite some time and that we may be nearing a point of a reversal. News does not move the markets it only triggers certain rallies and reversals. I am seeing red flags on this move, and in the banks, let me explain by showing you the financial sector as a whole.

XLF is an ETF for the financial sector and is showing some extreme extensions on the daily chart. When you have five waves up, it means you can start to look for topping signs and a strong reversal because that rally is most likely over. Going back to the beginning of October I can see a clean five wave structure laid out. The price has hit the typical fib targets that you would want to see in a standard impulsive wave, and is now approaching the 200.0 fib, which is mostly likely the end of the 5^th wave. That 200.0 fib lies just up above at $18.74. All of this is bearish for the banks as a whole. Sure, there may be a couple bank charts that holdup, but I would be bearish on the sectors as a whole right now. It seems as though the ‘stress test’ is lining up to just be a false breakout, only to find price reversing quite significantly.

Author: Peter Nitso

Twitter: @PeterNitso

pnitso@yahoo.com

Paper bought 10,000 FSL March 16 Calls for $.05 (8.5 times usual volume) when stock was trading $15.67
Paper bought 500 PMCS Aug 8 Calls for $.25 (31.7 times usual volume) when stock was trading $6.81
Paper bought 14,000 RAD April 2 Calls for $.15 (34 times usual volume) when stock was trading $1.81
Paper sold 18,435 ETFC Jan 2015 10-17 Call Spread for $1.93 when stock was trading $11.01
Paper bought 4721 RWT Oct 25 Calls for $.95 (11.9 times usual volume) when stock was trading $23.37

Paper sold 2500 CERS Aug 5 Puts for $1 (59.2 times usual volume) when stock was trading $4.30
Paper bought 7000 STX April 39 Calls for $.59 when stock was trading $35.44
Paper sold 18,435 ETFC Jan 2015 10-17 Call Spread for $1.93 when stock was trading $11.01
Paper bought 2000 ERIC July 13 Calls for $.875 (3.7 times usual volume) when stock was trading $13.20
Paper sold 7250 AUY July 15-17 Call Spread for $.44 (3.9 times usual volume) when stock was trading $.44

Homes in backlog at December 31, 2012 increased 62% from the prior year, with significant increases in most regions due to increases in net sales orders as compared with the same period of the prior year. A further breakdown of this number shows that the Western region of the USA is home to the largest average closing price, $319,300, up 4% YoY (year over year). In addition to positive price trends, this region is also home to the largest number of closings. Full year YoY closing in the region were up over 60% for DHI, according to their last quarterly release.

From a macroeconomic prospective, YoY, housing permits are up 29% for one-unit structures. In the category of housing starts, the same figure is up 20%. It is important to define these data points too. Permits are privately owned building authorizations, while starts are the number of residential construction projects that have begun. These are also the type of homes that DHI tends to construct.

DHI shares are a near a 52 week high and the analyst community is enjoying the move for the most part. 9 of the 22 analysts that cover the stock have a buy on it, 11 holds, and 1 sell. The 36 day options imply about a 8% up or down range by expiration at a one sigma confidence level

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salerno.mark.a@gmail.com

Going forward into 2013 I am expecting ALK to see higher levels. In the short term I expect this (iii) wave to top around $62.75, while the end of iii wave to end near $67.76. Once we reach these levels I expect us to pullback in a larger fashion that may take a couple months to play out. My target for this iv wave is 46.50-51.50 before we can see the final rally later in 2013 taking us up to the higher target of $80!

Delta Air Lines (DAL)

 Delta, Delta, Delta…. showing some swings as I type this. The airline looks like it has been on the runway from mid 2007-2012. But once 2013 came around the engines were fired up and ready for takeoff!

This longer-term chart shows the larger contracting triangle that has been playing out…. whipsawing investors as they buy the breakouts only to find the price reversing immediately. But now, there are enough waves in place to confidently count A-B-C-D-E and a breakout with an i-ii setup. This breakout from the triangle has already cleared some big resistance at $14.91 and has poked its head up through $16.19. It looks like we are still in wave iii of 1 with waves iv and v to come. Short-term I expect a pullback to $14.85-$13.33 in a wave iv of 1 ultimately to finish up all of wave 1 up at the $19 region.

When I place the fibs on the chart for waves 3 and 5 it gives me a longer-term target of the $25-$32 region. Depending upon how long wave 2 wants to take these targets can still be seen in the later half of 2013… pending departure time.

 Hawaiian Holdings (HA)

Put on your leis because Hawaiian Holdings is setup in a big way to breakout, and if you capture this move you could have a trip for two at the nicest resort in Maui. Sound easy enough?? Well maybe I got a little carried away, but nonetheless this chart looks positioned for a monster rally, so let me explain…

Just like in Deltas chart above, it was working on a larger triangle from 2007-2012… well, so is HA but its technicals are wound up like a compound bow ready to fire. All of the waves look to be complete if the E wave truncated, they do truncate and it happens more then you might think. But, if it did not truncate it can still drop down to $4.75 before it ignites the rally.

What really is interesting and so appealing is the MACD, it has been coiling since early 2009 and is reaching the point where it looks to breakout in a monster way. It could be easy to argue that since it hasn’t broken out, how do you know it’s going to be to the upside and not the downside? Very valid argument, but the count does not add up if you view this as bearish. Sure, I could be missing something…but in my eyes this is the most likely view of Hawaiian.

Since this is a triangle it can take its sweet time to complete before we get an answer of which direction it chooses, but my longer term upside can extend all the way to $14.50-$16.25. Its first resistance level is up above at $6.60, followed by $7.95 and ultimately the highs put in at $11.15, but after that its all blue skies to Hawaii.

Author: Peter Nitso

Twitter: @PeterNitso

pnitso@yahoo.com