BKX Bank Index Weekly Chart Overbot Negative Divergence

The bank index chart is showing a long two-year rally running out of gas. The indicators are overbot with negative divergence (red lines) as price makes new highs signaling that a spank down is coming. The long-term channel is narrowing as price peaks. There is a pink rising wedge in play which also points to a pull back. The banking sector had a nice rising wedge that ended in the April market sell off, a perfect time for everything to roll over to the downside, but the BOJ hit the after burners on yen destruction, and the free and easy money flowed into U.S. equities, bank stocks and European stocks and bonds, pumping equities higher. Note that the banks are at higher levels than the May top. Banks leading the markets are a positive sign but traders may be chasing financials since that is the behavior expected to happen in a normal business cycle.

The analysts and pundits are out in full force the last couple weeks pumping the banks, especially the regionals, KRE. The pumping has catapulted the BKX higher over the last two weeks. The pumpers are trying to get Ma and Pa excited about banks so they can serve as bag holders just like what occurred recently with REIT's, home builders and utilities.  Projection for BKX is sideways to sideways down with a rolling over of price on tap as the weeks play out.  This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.