We saw a nice bounce in the stock market yesterday, but the trend on the “internals” on the market continues to be the same that it has been since the beginning of the month. In other words, “internals” continue to be strong on down-days and weak on up-days. For instance, the breadth on the S&P 500 was just 2 to 1 positive yesterday...which is mediocre at best for a day that the index rallied over 1%. It was actually negative for the Nasdaq Composite...on a day when that index rallied 1.7%! That is not good at all........On top of this, the composite volume barely made it above 3bn shares...so there is no question that the volume continues to be much stronger on the days when the stock market declines than it is when the market rallies.
It seems like there is a new issue to throw into the mix each week...and this week’s “new issue” that is getting the most attention this week surrounds the Supreme Court. However, another “new issue” is the report that several of the most powerful global banks have allowed some suspicious transactions that allowed these banks to profit from powerful and suspicious players for two decades. This news hit the tape over the weekend and the bank stocks around the globe have been hit hard over the past two trading days. This has taken the domestic bank ETF below a first support level...and down close to another one. More importantly, it has taken the European bank index down do a CRITICAL support level. Therefore, any further downside follow-through will be VERY negative for the European banks.
Let’s start with the domestic banks...and the KBE bank ETF. This week’s news has taken it below the bottom line of a “symmetrical triangle” pattern. It has also taken ...
