The Fed is holding steady and I believe this is the best course. No matter what the news reports on banks, I can’t see anything positive. The Philadelphia Bank Index (BKX) is well below the 2003 low with the 2×1 descending angle directly above as resistance. Banks have not had anything more than a nice dead cat bounce off the March lows.
The Financials Select Sector SPDR (XLF) looks similar to the BKX.
The KBW Regional Banking Index (KRE) had a big spike when the Fed moved in October 2008, but has been weak ever since that time. There must be plenty of bad debt remaining on the bank balance sheets.
The Broker/Dealer Index (XBD) is above the 2003 low but had only a 25% price bounce at the 50% time cycle. No one wants to buy stocks of companies in the banking and broker sector.
Charts courtesy of Stockcharts.com
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