Bank Stocks Could Be Soft For Next 1 To 3 Years, Says Joe Friday

By Chris Kimble of Kimble Charting Solutions

CEO of Kimble Charting Solutions • Dec 23, 2016 at 10:41 AM EST

When the ratio is moving up, banks are stronger than the broad market. When the ratio is moving lower, banks are underperforming the broad markets.

Below looks at the Bank Index/S&P ratio. When the ratio is moving up, banks are stronger than the broad market. When the ratio is moving lower, banks are underperforming the broad markets.

Unless one lives under a rock, you are most likely aware of how strong the banks have been of late. Could strength of late actually be followed by weakness/under performance for the next 1 to 3 years?

(Click on image to enlarge)

The strong outperformance of banks of late, has pushed relative momentum up to levels seen only a few times in the past decade.

Joe Friday Just The Facts; Banks have underperformed that broad markets for the following 1 to 3 years.

At the same time momentum is lofty the Bank/S&P ratio is testing “dual” channel resistance at this time.

Full Disclosure- Premium Members bought banks in late August before the rally and have been selling into strength and bringing up stops. Risk On trade in the broad market and banks, wants/need this ratio to have “different results this time!” Should this ratio breakout, game plan is to add back some back exposure, that has been reduced of late.

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