Monthly Archives: June 2016

Bank Stock Breakdowns

The money center banks broke down sharply at the beginning of year but were able to bounce back up to retest their former support-turned-resistance levels. Those retests failed after the dovish FOMC statement was released and the initial pullback accelerated after the Brexit vote dashed all hopes of a near term interest rate hike.


Under improving economic circumstances it would be a difficult task to repair the damage on these charts. The current scenario as framed by the Federal Reserve statement and the issues in Japan and Europe suggests it will take time and perhaps much lower prices before there is stabilization in the banking sector.

S&P 500 Channel Breakdown Projects a 50% Retracement of the February Rally

The apparent ineptitude of British pollsters and the failure of institutional market participants to be properly positioned ahead of the Brexit vote sent world markets into a tailspin today. Just yesterday the S&P 500 was at the top end of its three month trading channel and poised to breakout to new all-time highs, but then in one session it collapsed back down to the lower end of that range, and is now threatening to take out support.


If channel support is breached the pattern projects a target price measured by taking the height of the channel and subtracting it from the support line. It suggests a return to the 1960 area which is a 50% retracement of the rally of the February lows.


S&P Channel Test

Despite the false breakout earlier in the month, the subsequent pullback that took it back below its 50 day moving average, the dovish FOMC statement, and the formation of negative candles over the last several days, the S&P has returned back to penetrate the upper end of its trading channel, and there is a likelihood that if the Brexit vote goes the way of the current polling, it could see new all-time highs as early as tomorrow.