Investors understand the importance of banks to the economy and the broader market.
And since bottoming with the coronavirus crash, the $BKX Bank Index has more than doubled.
BUT, this year has seen the Bank Index slow its roll – see point (1) on the $BKX “weekly” chart below.
As you can see, the index made a high earlier this year and hasn’t been able to exceed that high. This divergence is a bit concerning when adding historical context.
Now, of course this index could continue to rally and make new highs (and none of this would matter). But if it doesn’t, then we have a problem.
As you can see, in 2007 a lower high netted a 90% decline. And in the past 4 years, we have had two lower highs that produced declines of 30% and 50%.
What would make this chart super bullish?
If the index breaks above the highs of a few months ago and the financial crisis highs, banks would send a super bullish message to the broad markets!!!
This article was first written for See It Markets.com. To see the original post CLICK HERE.