The banking index tracks excellent Elliott Waves. I don't know why but it just does. I love these charts. They are pure me. I made the counts. I keep these on my Stockcharts.com public lists.
The banking index seems to be in a different wave than the rest of the market. This is not surprising to me because this index is one, if not THE, leading bear sector index. It will likely be throughout the rest of the bear market.
The long term daily chart shows an extended wave (3) from the Sep 2008 highs. It follows form and plays by all EW rules. Perhaps I have this mismarked. I dunno but its nice to look at.
In any regard the key point today is that this index has been toying with a great bear market upper channel line. It had a failed breakout and got pushed back into this channel. Every other index (I think), including the DOW has broken out of their respective bear channel lines this past week except this index.
It appears that after a failed breakout it morphed into a wave [iv] triangle and is ready to hit point (e) in the triangle first thing Monday. Question is, will it bounce and break up and out of the triangle and upper bear channel line? Is this index a laggard?
It makes one wonder why they moved the announcement of the stress tests back to later this week. Does the PPT employ Elliott Chartists? I would hope they do. They throw a lot of taxpayer money around if they didn't. Or is it all just coincidence? No matter.
What matters is the index is coming to the end of an apex formation. It can break up and out or down and stay in the Great Bear channel and make a possible run for new lows on this index leading a great pullback on P2's rally.
P2's further upside (or downside) this week hinges entirely on this one lagging index.
Laggard to the upside or leader to the downside? Place your bets.
As an aside, this chart suggests that even if this index breaks out and achieves one more high, its high point will be easy to see and will likely mark an important top to P2's rally overall.