If you've been following the movements within the individual sectors lately, you've probably noticed the lack of participation in behalf of the financial sector. In a quick comparison, using the 10 principal sectors of the S&P, take a look at who has the lowest current RSI reading.

One might look at this and think that the group still has catching up to do. The XLF call volumes were pretty heavy today, especially in Nov expiry's, but what I find interesting is that the bullish percent for the financial sector, is the fourth highest reading among sectors.

The XLF traded well today, until 3 pm ET, where it completely fell apart into the close, finishing right at its 50 day moving average. The XLF was pretty active today, but most of the volume occurred during the last hour where shares went off at the bid into the close.

I've been observing which sectors and groups are taking out or rejecting their 50 day moving average lately, as a measure of strength/weakness. Looking at the $BKX, it backed off its 20, which is pretty weak considering that the indices are at new highs.

Now take a look at the typical leadership names, and a few other stand out performers in financials.  

The weight in financials is an important read right now. If the $BKX cannot get back up above $45, I think this points to a group that is ready to correct sharply as the market rolls over. I have a vested interest in the Regionals, which have been the worst performer in the sector. Take a look at the relative weakness between the KRE and the XLF...

There are a plethora of weak regional banks out there to choose from, but consider the KRE, which is an ETF that tracks regional banks. You know I am a freak for price patterns, and this is a great retest of a bearish triangle.

In closing, if the financials can't start to move higher, they are an easy target to short into the next correction. Start shopping for rips to sell.

Long: OA Prose

Short: Regional Banks