How Banks perform in the long-term has historically been important to the S&P 500.
Are Banks sending a spooky message to the S&P 500 this week? Could Be!
This chart looks at the Bank Index (BKX) over the past 8-years. Since the lows in 2011, the index has created a series of higher lows and higher highs inside of rising channel (1).
The index hit the top of the channel in January of last year. After hitting resistance the index has created a series of lower highs and lower lows, forming a channel (2).
The index hit dual support around Christmas of last year and the rally that has followed has the index kissing the top of the falling channel at (3).
While kissing the top of this falling channel, the index could be creating a bearish reversal pattern, highlighted in the box above.
Are banks creating a topping pattern this week? Possible!
If the bank index would happen to run out of upside momentum at the top of this channel, they would send a “spooky message” to this sector and the broad market as well.