Banking Sector BKX @ $43

The BKX $43 Bank Index and XLF $14 Financial sector Index are 2 ETFs to watch for future market direction. The BKX and XLF first warned of a breakdown in Feb 2007 (BKX $120, XLF $38) and finally fell below the 50ema in July 2007 (BKX $100, XLF $32), 15 months ahead of the major market fall in Oct 2008. Both indexes hit a low in March 2009 (BKX $18, XLF $6)

Since March 2009, the index had a Bear Market rally and peaked in October 2009 (BKX $49 and XLF $15.76). The financials have failed to move above the peak on Wednesday 14th October, over 47 trading days. Failure to reach a new High by 60 days and more importantly 90 days will indicate another down turn ahead. I will be watching to see if we make a New High by Friday 15th Jan 2010 and Friday 26th Feb 2010

BKX Analysis
1. macd -0.48 and falling - SELL
2. stoc (14) oversold - SELL
3. current price ($42.66) > 5ema($42.93) > 10ema ($43.33) > 50ema($43.93) - SELL

BKX SELL $45 Stop $46 Targe $34 Risk/Reward 11/1

Target date to enter trade is Wednesday 6th Jan 2010