The banking sector has really underperformed in 2015. And there may be more weakness ahead for bank stocks. Why? Even though the Bank Index (BKX) has traded higher of late (and may have a little higher to go), it still appears to be in a corrective upmove.
BUT we should note the key to this theory: The December highs (75.61). The Bank Index currently trading well below this level.
I wrote about the potential for weakness in the banking sector in early January and provided an update when the Banking Index broke its 6 year uptrend.
Note that the recent move lower traced out a clean 5 waves down. We now need to watch the current move higher to see if it stalls before the December highs. Stocks like Bank of America (BAC), Citigroup (C), and JP Morgan Chase (JPM) have been particularly weak.
If more downside is to come, the banking sector should stall sometime soon. Keep an eye on the Bank Index.
Bank Index – 2 Hour Chart
Thanks for reading.
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No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
