Considering the BREXIT noise and subsequent chatter about the banks and banking index, I thought we should take some time on the subject. What are the charts saying about bank stocks?
Let’s finds out.
First, let’s address some prior work on the subject. If you spend a little bit of time on the following post “Banks At Make It Or Break It Point” you’ll find that in March 2009 I was advocating a “Long Banks” position. Yes, if you can remember, during the height of the financial crisis, the PATTERNS appeared that were simply saying PRICE and TIME were complete on the banking index.
With all of the BREXIT noise – and yes it’s noise- I figured it was time to go back and and take a closer look at the banks. Quite frankly, I was shocked that all the way back in January of 2015 the PATTERNS we were warning of a top in the banking index. On a monthly basis, the banks never closed above the measured move from the final move up.
What does this mean? Well, the NOISE from the talking head pundits and the “could have should have” analysts is screaming loud and clear. But if we “tune out the noise” (and yes, you can get a @seeitmarket tshirt) you’ll find that the banks have been done for almost a year and a half.
What do we do with this information? Well, we look for measured moves and clues. So far the corrections in the Banking Index have been almost the same (see blue arrows – measured moves) And, with the BREXIT volatility the move down tagged the trendline that comes from 2009. I believe this is a key level for the Banking Index – hold the blue trendline and we should go higher and perhaps to new highs. A WEEKLY close below spells trouble and we’ll come back with further targets to the downside.
The big picture is the Banking Index has been telling us they were tired/heavy for a year and half. Quite frankly, BREXIT is old news.
Trade safe and thanks for reading.
More from Bart: Broken Pattern Says TLT Could Trade Higher This Summer
Twitter: @BartsCharts
Author does not have a position in 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.
