Bank Earnings Hit Bank Index As 6 Year Trend Line Falls

bank stocks bubbleSeveral bank stocks reported sub-par earnings, boosting fears tied to the Swiss National Bank news. All in all, the banks endured another rough week, with the Bank Index (BKX) falling 4 percent. A little over 2 weeks ago, I shared a research note about why investors should be watching the banks in 2015.

Well, we may have stumbled upon our first reason (for concern) this week.

The bank index penetrated its 6 year rising trend line. Yep, this is the first time since 2009 that the bank index closed BELOW the log trend line that has held this uptrend intact. This is a BIG DEAL if you ask me.

Check out the charts below. Log trend lines are very powerful, especially longer term. They help you catch trends and expanding rates of change and are very useful at spotting “big” support and resistance levels.

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And with the ECB on deck next week, there’s likely to be a lot of “noise” around the banks. Fasten your seatbelt.

Bank Index Chart – Breaks Trend Line Support

bank index breaks trend line support january 2015


Bank Index – Falling Into Lateral Technical Support

bank index technical support level january 2015


You can also track the financials sector via two popular ETFs: the SPDR Bank Index (KBE) and the Financials Select Sector (XLF). Thanks for reading and have a great week!


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No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.