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<\/figure>\n\n\n\nBKX spent the past two months tracing out a \u201crising wedge\u201d formation on the chart. This is a bearish pattern that forms as a stock makes higher highs and higher lows, but the distance between the highs and lows narrows. <\/p>\n\n\n\n
Most of the time, this pattern breaks to the downside \u2013 as it did this week with BKX. <\/p>\n\n\n\n
Admittedly, many of the caution signs I\u2019ve pointed out in multiple essays over the past two months haven\u2019t done squat. The explosive setup in the Volatility Index (VIX), the low put\/call ratio, the nearly unanimous bullish opinion of the financial television talking heads, bearish seasonality, absurdly high fundamental valuations, have all been rolled over by the persistency of the bullish momentum. <\/p>\n\n\n\n
So, I won\u2019t blame you if you roll your eyes as you read today\u2019s essay. <\/p>\n\n\n\n
But, the action in bank stocks is the \u201ccanary in the coal mine\u201d for credit events. When credit gets tight, when it\u2019s difficult to borrow, when the economy starts to lose liquidity, it shows up first in the banks. <\/p>\n\n\n\n
Indeed, back in 2007 \u2013 just before the Great Financial Crisis \u2013 the KBW Bank Index peaked in July. It lost 25% over the next three months as the S&P 500 continued higher to its peak in October. <\/p>\n\n\n\n
Of course, it\u2019s a giant leap to say that this week\u2019s poor action in the banking sector is signaling a credit crisis of the magnitude of the Great Financial Crisis. It\u2019s too early to draw that conclusion. <\/p>\n\n\n\n
But, on top of all of the other caution signs throughout the market, at the very least, this week\u2019s action in the banks is a reason to be careful buying stocks right here. <\/p>\n\n\n\n
The canary is coughing. <\/p>\n\n\n
Best regards and good trading,<\/p>\n
![\"Signature\"](\"https:\/\/files.jeffclarktrader.com\/global\/signatures\/jeff-clark-signature.png\")
<\/p>\n
Jeff Clark The bull markets keep running, but banks may be hinting at what\u2019s next<\/p>\n","protected":false},"author":159,"featured_media":0,"comment_status":"closed","ping_status":"0","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-25433","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\/25433","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\/159"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=25433"}],"version-history":[{"count":4,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/25433\/revisions"}],"predecessor-version":[{"id":25448,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/25433\/revisions\/25448"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=25433"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=25433"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=25433"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=25433"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=25433"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=25433"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=25433"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nEditor, Market Minute<\/em><\/p>","protected":false},"excerpt":{"rendered":"