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The S&P 500 is just a couple of percent away from testing all-time highs. Historically quality broad market gains in the S&P took place, when Banks went along for the upside ride. Since last July, financials have headed lower and the broad markets has had little luck moving higher (breaking above old highs).
The Bank Index (BKX) hit its 61% Fibonacci retracement level last summer and has created a series of lower highs and lower lows. The index hit its 38% Fibonacci retracement level earlier this year and has moved higher off this key level. The index remains inside of a 5-year rising channel and is testing 1-year falling resistance at (1) above.
With the S&P nearing last years highs, we humbly feel what banks do at (1), will go a long way to helping or hurting the prospects of a broad market breakout.
Bottom line- Broad market wants banks to break above 1-year falling resistance, if it is to breakout to new all-time highs. Keep a close eye on the BKX index over the next couple of weeks, should send an important message to traders/investors.