A New Direction for the Banking Sector

It’s time once again to pay attention to bank stocks. [Jeff Clark's Market Minute]( A New Direction for the Banking Sector By Jeff Clark, editor, Market Minute It’s almost earnings season, which means it’s time once again to pay attention to bank stocks. The action in the banking sector tends to lead the action in the broad stock market. When the banks are strong, the market rallies. When the banks are weak, so is the stock market. The last time we looked at the [KBW Bank Index (BKX)]( we noted that the sector was stuck in a relatively tight trading range for a couple of months. Energy was building, and the sector was on the verge of a larger move – in one direction or the other. We slightly favored an upside move. And we suggested that if the bank stocks rallied, the rest of the stock market would follow. Sure enough, the bank index rallied hard all through March – gaining 8.4%. That helped the S&P 500 to put up a 3.1% gain for the month. Early Warning Signs Now, though, it’s a new month, a new quarter, and a new earnings season. And it looks like the banking sector may be headed in a new direction. Take a look at this updated chart of BKX… [(Click here to expand image)]( The index finished March at its highest level in a year. Notice, though, that the momentum indicators at the bottom of the chart are still well below their December highs. This sort of “negative divergence” tells us the momentum behind the current rally is weakening. It’s an early warning sign of a possible change in trend – from bullish to bearish. The upcoming earnings season could be a catalyst for that change. Free Trading Resources Have you checked out Jeff's free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. Banks Lead the Market Investor sentiment towards the bank stocks is bullish. Most of the financial television talking heads are talking up the banking sector. Everyone seems to be looking for good earnings results from the banks. That suggests to me that much of the potential for good news is already discounted in the price of the stocks. So, any hint of bad news could inspire a decline in the banking sector. And since the banks tend to lead the broad stock market, if BKX starts to fall, the rest of the stock market should follow. Best regards and good trading, [Signature] Jeff Clark Editor, Market Minute [Jeff Clark's Market Minute]( Jeff Clark Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.jeffclarktrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Jeff Clark Trader welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-800-752-0820, Mon–Fri, 9am–7pm ET, or email us [here](mailto:contactus@jeffclarktrader.com). © 2024 Omnia Research, LLC. All rights reserved. Any reproduction, copying, or redistribution of our content, in whole or in part, is prohibited without written permission from Omnia Research, LLC. [Privacy Policy]( | [Terms of Use](