Don't Ignore This Chart!

Minding Three Gaps for Three Big Banks


Banking stocks bounced on Tuesday as the 20+ YR T-Bond ETF (TLT) fell and the 10-yr T-Yield ($TNX) moved higher. These bounces reinforce the positive correlation with TLT and the negative correlation with $TNX. The chart below shows three big banks in long-term uptrends and six month stalls. Technically, Bank of America, JP MorganChase and Morgan Stanley are in long-term uptrends because they are above their rising 200-day EMAs and they hit new highs in March. 

Despite uptrends, these three have traded flat since mid December and I am sure plenty of chartists see head-and-shoulders patterns taking shape with the green zones marking neckline support. I am more inclined to see downtrends since March (red trendlines) and I consider these corrections within a bigger uptrend. The big question is: when, if ever, will this correction end? The red zones mark the gaps and the mid May highs. A close above these levels would fill the gaps and break the first resistance level. This would reflect an increase in buying pressure and point to an end to the corrections.  

Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
Subscribe to Don't Ignore This Chart! to be notified whenever a new post is added to this blog!
comments powered by Disqus