{"id":20363,"date":"2022-11-18T07:30:51","date_gmt":"2022-11-18T12:30:51","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=20363"},"modified":"2022-11-18T07:30:51","modified_gmt":"2022-11-18T12:30:51","slug":"why-a-year-end-decline-is-likely-if-this-sector-moves-lower","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/why-a-year-end-decline-is-likely-if-this-sector-moves-lower\/","title":{"rendered":"Why a Year-End Decline Is Likely if This Sector Moves Lower"},"content":{"rendered":"

The bank stocks have been leading the stock market higher over the past several weeks…<\/p>\n

While the S&P 500 has rallied about 10% since it bottomed in early October, the KBW Nasdaq Bank Index (BKX) has rallied 15%.<\/p>\n

But now the banking sector is looking toppy…<\/p>\n

So far, BKX is down more than 3% this week. And if that continues, it could spell trouble for the broad stock market.<\/p>\n

Look at this chart of the S&P Financial Sector Bullish Percent Index (BPFINA)…<\/p>\n

\"Chart\"<\/div>\n

A bullish percent index shows the percentage of stocks in a sector that are trading in bullish technical patterns.<\/p>\n

It’s an easy way to measure overbought and oversold conditions for a sector.<\/p>\n

Typically, a reading above 80 (80% of the stocks are trading in bullish technical patterns) – means a sector is overbought. Readings below 30 indicate oversold conditions.<\/p>\n

Buy and sell signals occur when a BPI reaches extreme levels and then reverses…<\/p>\n

For example, when a BPI rallies above 80 and then turns lower it generates a sell signal.<\/p>\n

When a BPI dips below 30 and then turns higher, that’s usually time to buy. At least, those are the general rules.<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

On the chart, the red arrows point to the three BPFINA sell signals this year. Take another look…<\/p>\n

\"Chart\"<\/div>\n

Each previous signal triggered at least a 17% drop in the KBW Nasdaq Bank Index. Each decline lasted about six weeks.<\/p>\n

And since the banking sector tends to lead the broad stock market, the declines in BKX coincided with declines in the S&P 500.<\/p>\n

On Wednesday, the BPFINA closed at 89.55… That’s the most extended and overbought reading of the year.<\/p>\n

When it turns lower, it’ll trigger the fourth financial sector sell signal of the year.<\/p>\n

Traders should pay close attention to this chart and to the action in the bank stocks over the next few days.<\/p>\n

We don’t have a BPFINA sell signal yet. But just a little more weakness in the bank stocks will do the trick.<\/p>\n

Once it happens, it’ll be hard to argue for a year-end rally. We’ll most likely get a year-end decline.<\/p>\n

Best regards and good trading,<\/p>\n\n\n
\"signature\"<\/td>\n<\/tr>\n<\/table>\n

Jeff Clark<\/p>\n

<\/p>\n

Reader Mailbag<\/strong><\/h2>\n

In today’s mailbag, a Market Minute<\/em> reader shares his thoughts on Wednesday’s essay<\/a> by Clint Brewer…<\/p>\n

\n

Housing cost (rents and variable rate mortgage costs) continue to rise as do food and energy costs. These are primary components of monthly family expenses.<\/p>\n

Rising mortgage rates are having adverse effect on home sales and new construction resulting in lost durable goods and building product orders.<\/p>\n

It may be a while before we see the bottom despite the recent CPI declines. I fear that rising unemployment will lead to declining GDP and equities.<\/p>\n

I hope I’m wrong, but I’ll remain on the sidelines for a bit longer.<\/p>\n

– Anthony M.<\/strong><\/p>\n<\/blockquote>\n

And other readers have positive feedback on Jeff Clark’s insights and trade recommendations…<\/p>\n

\n

Jeff and his team have an excellent sense of anticipation of market movements, which is why their recommendations are successful.<\/p>\n

– Anonymous<\/strong><\/p>\n<\/blockquote>\n

\n

Jeff, I’ve always loved your insight.<\/p>\n

– Fredrik H.<\/strong><\/p>\n<\/blockquote>\n

Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming at feedback@jeffclarktrader.com<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Traders should pay close attention to the action in the bank stocks over the next few days… <\/p>\n","protected":false},"author":49,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-20363","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/20363","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/49"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=20363"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/20363\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=20363"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=20363"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=20363"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=20363"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=20363"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=20363"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=20363"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}