#BankStocks – as GS and DB tumble…

It is on my my mind that we’re seeing 2007 all over again in the financial sector stocks.

During the pullback in the SPX since January, housing stocks and the bank stocks have been breaking support and beginning to “stair-step” down (see the chart below), led to the a possible 2008 cellar by DB and now with GS (a bellwether, no less) following suit.

The rest of those I follow – JPM, BAC, WFC, USB – are sitting right on support. It the market takes another hard hit (like tomorrow?), they could all be in solid downtrends.

Needless to say, as the banks and the general market tend to feed on each other in up trends, they can also eat other alive to the downside too.

(click on the chart for a larger view)

$KBE – Are these banks or the walking dead?

Long-term market breadth has been rising for nine days.  That usually takes most stocks in the same direction.  After all, if a stock isn’t rallying when it has the entire market on its side, when is it going to rally?

So, consider the banking sector…

JPM, BAC, GS, WFC, DB, KBE (the ETF for the sector) are all falling while breadth is positive (see the rising green in the middle of each chart below), and now all of these stocks have broken support falling out of their respective consolidations (see the blue boxes on the charts below).

Don’t those boxes look a lot like coffins?  So is this out of the coffin and into the grave like “out of the frying pan and into the fire”?

Enough fiddling around.

If you’re a bull this is not a sector you want to see lagging, let along falling apart.  So here’s the heads-up, they’re likely going down.

(click on the chart for a larger view)



#FinancialStocks – after running on fumes, finally run out of gas

Since market breadth turned down with conviction on March 3, the banks (like much of the general market) have been defying an impending decline.  But that defiance appears to be over as they have been falling for the past few days, and that fall has accelerated.

GS is now down 6.7%, BAC 8.8% and JPM 4.7%.

GS, a bellwether stock, has how retraced its entire advance since early December. That is  not a good sign for the continuation of this bull market, but will see how that weakness plays out in the fullness of time.

(right click on chart for a larger view)