Banking stocks as characterized by the S&P Banks Index (BIX.X) and KBW Bank Sector Index (BKX.X) both tested what I feel are short-term critical levels of support on their retracement brackets. It's been a couple of months since we first "smelled a skunk" in this group and the odor has yet to leave. Recent rallies have made for good shorting opportunities. A break below current retracement levels might make for a good shorting opportunity for bearish traders. For now, I'd wait for a rally to resistance before shorting, or wait for a break of support to short. Not looking to get long until some downward trends are broken.
S&P Banks Index (BIX.X) Chart - last six months
This morning, the BIX.X traded very close to the 38.2% retracement level we've had in place on this index for a while. Long-term upward trend is still upward trending, but there does look to be some downside. Several months ago I felt that a break below the 643 level would be trouble for the banks and had me "smelling a skunk." The rally near 643 three sessions ago and resistance found near 643 tells me there may still be a skunk or some bad news coming from this group. Would prefer to see a rally back near 630 as an opportunity to get short. MACD on the above timeframe is rolling and below the zero level. This too tells me that this group lacks upward momentum.