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Pre-Market Update: FAZ, XLF

|Includes:Direxion Daily Financial Bear 3x Shares ETF (FAZ), XLF

There may be another opportunity to position short in the Financial Sector SPDR ETF (NYSEARCA:XLF) by going long the Direxion Russell 1000 Financials Bearish 3X ETF (NYSEARCA:FAZ).

Typically, entering a trade prior to a Fed announcement is not a good strategy and that may be proved true yet again if this trade is stopped-out.

However, if FAZ declines to test the support and trend-line shown below (in the early part of the session), then we can enter and set the stop at 19.87.

TAZ Hourly Chart

Chart by TeleChart

What we would expect to see is a sustained rise in FAZ with it pulling away from the entry point as we go into the latter part of the session.

It may be stopped out. At the same time, looking at the big picture of the XLF, we can see that on the Monthly chart (closing basis) the upward movement of the index has slowed. The XLF may be nearing a top.

XLF Monthly Chart

Chart by TeleChart

It may be a stretch to consider the monthly chart. Even so, there is no questioning that the upward trend has slowed and that at least a correction in XLF is a probability.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in FAZ over the next 72 hours.

Stocks: FAZ, XLF