The health of our banking and financial sector is critically important to a strong economy.

It’s also important to the stock market.

Today, we look at a long-term ratio chart of the Bank to S&P 500 Indices. We also compare this to the S&P 500 Index performance to identify patterns of importance.

In this regard, the chart highlights 3 key bearish divergences. The last two happened to last 2 years in length and lead to big downturns. The current one is 3 years old. Despite rising interest rates, banks continue to underperform.

Also, when considering that stocks have not performed well this year, it adds to worries that there could be much further to fall!

(Click on image to enlarge)

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