Nathaniel Mathe...'s  Instablog

Wells Fargo & Company (WFC): WFC traded higher by $0.69 or 1.99% today and closed at $35.40. Everyone including myself is watching WFC's earnings report tomorrow morning. The report will kick off the season for the majority of the financial sector. I entered into a long position early this morning at $35.05 because I believe technically we are setting up for a strong move to the upside with limited downside. Shares closed above strong resistance around $35 per share giving WFC room to run up to $36.40. My prediction is that WFC will beat EPS consensus by $0.02. As you can see there is also a fairly close upward sloping trend line that should offer support on a move downward. Lastly, shares of Wells Fargo haven't outperformed to the extent of the rest of sector which leads me to believe there is less room to the downside.

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Financial Select Sector SPDR (XLF): The XLF performed very well today with shares up 1.24% to close at 17.15. Basically the weekly chart looks exactly the same as it did a couple days ago. Shares are currently trading above the upper end of the bollinger bands with the RSI nearing overbought levels. The XLF is currently trading at multi-year highs as highlighted in the graph below. It would be reasonable to expect a pullback to $16.50 but I believe we see shares trade at $17.50 next week before pulling back. I remain bullish on the financial sector for the first quarter as I believe investment will continue to flow into outperforming sectors. You can read my article "3 Quick ETF Picks" on Seeking Alpha here. Currently I am long the XLF via $16 calls that expire at the end of next week.

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Silver Wheaton Corp (SLW): Shares rose by $1.03 or 2.92% percent today to finish at $36.32. I currently have no position is SLW but am watching closely tomorrow because I am long the SLV and physical silver. The SLW is approaching a short term trend line which should offer resistance. I am looking for a clean break and close above this trend line with the RSI above 57 to signal the SLV to move up to its short term trend line resistance itself.

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SPDR Gold Shares (GLD): Shares traded up $1.49 or 0.93% today. Shares closed at $161.98 which is down slightly from the highs of the day. A strong downward sloping trend line offered resistance today as it has 3 previously times. A close above this trend line, around $163, will fuel the fire for higher price. I believe we will see a move back up to $167 quickly following the breakout.

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Disclosure: I am long XLF, GLD, WFC.

Additional disclosure: I may sell any of my long positions stated within the next 48 hours.