Thursday, April 28, 2011

The Major Divergence to watch closely

The Stock markets have been making new yearly and recovery Highs as the Master Cycles expected, but the Bank Indices have not joined in the party. This kind of bearish divergences, if prolonged are often an indication of  a topping process.

The daily Banks Index (BKX) (click on chart to enlarge) are struggling to rally, closing fractionally higher  at 51.40, close to yearly Lows, despite the general market being at new yearly highs. The Banks are seriously bearishly diverging from the rest of the markets and should be closely watched. We are below the 12/31/10 Low yearly close at 52.21, which means we are down for the year and this is bearish.  Long term Make or Break Cyan channel support is at 50.00.  Any sharp drop and solid close below 50.00 would be Super bearish.We have been in this LT bullish up channel, ever since the 3/6/09 Lows, with Key channel support is at 50.00.

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