Quality bull markets prefer to see Banks stronger than the broad markets or at least keeping up with it. Concerns often crop up when banks reflect relative weakness compared to the S&P.

This chart looks at the Bank Index (BKX) over the past few years, reflecting a falling channel of lower highs and lower lows has taken place inside of falling channel (1). This falling channel has now been in play for the past 15-months.

The index hit the bottom of the channel in December of 2018 and a counter-trend rally took place. The rally off the December lows saw the index hit the top of the channel two weeks ago where a bearish reversal took place as the “Sell In May and Go Away” season was getting underway.

Joe Friday Just The Facts Ma’am; A break of support at (2) would send a bearish message to stocks from the banking industry.

Keep a close eye on what banks do at this important test of support!