David's Trade Journal

[david_3011]

Bank Index ($BKX) Trade Update- Rebound

I continue to believe in the imminent rebound of the banking sector. And, I did use the allotted fund to take on more long position in a few components in the banking index. But, for this trade journal, let me stay with this trade on the index.

As of the end of this week, I believe the bearish Head and Shoulder formation has been completed. The target of this formation had been hit, re-tested a few times, and held up. Please see chart below.



In addition, this chart below shows the relation between Banking Index and the 7-10 year bond iShares. Whenever this iShare peaked, the Banking Index fell into troughs. And this was repeated just last week. One encouraging sign coming out of this is that the most recent uptick in Bond did NOT correlate with a lower trough in the Banking Index (yellow highlight).

In addition, while T-Bond may still have a few more upticks to go, it did seem running a bit ahead of itself lately. It may be due for a rest next week. Meanwhile, the Banking Index had started a little uptrend of its own.

Technically, it does appear a rotation into the banking sector is due to take place in the coming weeks.