Monday, June 8, 2009

The Bank Index: The Single Most Important Index (part II)

Figure 1 is a weekly chart of the S&P Banking Index (symbol: $BIX.X), and this is the same exact price chart I showed in the May 8, 2009 article, "The Bank Index: The Single Most Important Index."

Figure 1. $BIX.X/ weekly

From the article, I quote:

In essence, the current bounce off the March 9 lows is no different than the prior 3 bounces before it as prices have only retraced back into key resistance levels or the prior breakdown point. If the market is going higher, than the S&P Banking Index will need to close above resistance at 126.80 and the down sloping 40 week moving average.

We did get the weekly close over the nearby pivot at 126.80 and that was a by a mere 7 cents, but prices have yet to close above the down sloping 40 week moving average. Prices are off about 13% from those closing highs 4 weeks ago while the broad market has been moving higher.

As stated in the article:

As I try to figure out if this bear market rally will morph into a new bull market, I should probably remind myself everyday that I only need to look at this one chart to get my answer.

Stocks are not going higher without the banks. The 40 week moving average and the key pivot point (resistance level) at 126.80 are technical hurdles for the S&P Banking Index.

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