The ole saying “So Goes The Banks, So Goes Stocks” could be very accurate right now! This dual chart looks at the S&P 500 and the S&P/Bank Ratio on a weekly basis over the past 13-years.
In 2011 and 2016 the S&P 500 and the ratio both faced resistance at the same time at each (1). Once a breakout by both took place at each (1), both experienced strong rallies for months to come.
Currently, the ratio is facing falling resistance at (2) and the S&P is facing falling channel resistance at (3). Does the S&P need the ratio to breakout at (2) so it can break out at (3)? Good odds!
Keep an eye on what banks do the next few weeks as they could send a very important message to the broad market!!!