Banks are at a price point where they could send a very important message to the overall market.
This 2-pack looks at the Banking Index (BKX) and the Equal Weight Bank Index (NYSE:KBE) over the past 14 months. Both indices sent bearish messages to stocks over the past year, as a negative divergence with the S&P 500 started in January of 2018.
The counter-trend bounce off the December lows has each index testing 50% Fibonacci retracement level, which comes into play as resistance.
Since banks were downside leaders in 2018, what they do at the “half-way point” of last years highs and lows should send an important message to the broad market.