The earnings reports from companies roll out in earnest this week and the banks are one of the largest question marks. This performance chart shows all the major banks and brokers underperforming the $SPX since the test of the May high failed in June.
This creates a defensive posture and the banks will need to change this trend if we are going to see better price action in the Indices. JP Morgan (JPM) kicks it off tonight.
Note that Goldman Sachs (GS) and Morgan Stanley (MS) have underperformed the large banks. This will add increased scrutiny to the brokerage earnings as they are typically considered a leading indicator.
Greg Schnell, CMT