The Banking Index (KBE) has been on a pretty good run, but recently a few things have happened. While the SCTR ranking remains high, the KBE has started to underperform in Relative Strength shown in purple. Looking at price, we have broken the up trend this week. While the MACD has pulled back to the zero line, we can see the loss of momentum in the price action as well.
The Banking Index had been rising with an expectation of the Fed starting to raise rates. Lately, there have been some questions as to whether or not they can move in September. This Index appears to reflect this caution. We'll see if it stalls trying to back test the trend line from the bottom side. Conversely, If it can pop back into an up trend we should start to see the Relative Strength break out above this down trend and the price needs to take out the $37 level.
Good trading,
Greg Schnell, CMT
