One Consolidation for Me, and One for My Comey

The gist of price action throughout this week has been one of consolidation, with some fits, starts, head-fakes higher, and down-fakes lower providing a fair amount of frustration for traders pushing the envelope in terms of aggression. With the Comey testimony now underway in Washington, as traders we want to sift through the political noise on the internet and social media (of which there is plenty these days) and discern whether markets are actually reacting at all to the drama. After Comey, all eyes will surely look to the FOMC in the middle of next week.

That said, it is tough to ignore the rotation back into the small caps and financials, two major corners of the market which have been lagging noticeably for quite some time. 

However, as we discussed with Members last evening in the full-length video recap, perhaps too many were now leaning bearish on the banks. As a result, we took off a few banks from the short watchlist and adopted a more neutral tone. 

But with the sizable green candle in progress for the regional bank ETF as we speak (below on the daily timeframe), the threat of a meaningful rotation back into financials now looms. With this in mind, we have a few standouts now on the radar in the regional banking sector with one eye on the small caps in the IWM, to boot.

And, of course, we want to see if markets get through the Comey event without too much in the way of downside shocks.