{"id":27959,"date":"2026-07-03T07:30:00","date_gmt":"2026-07-03T11:30:00","guid":{"rendered":"https:\/\/jeffclarktrader.com\/market-minute\/?p=27959"},"modified":"2026-07-02T12:23:49","modified_gmt":"2026-07-02T16:23:49","slug":"why-we-watch-the-banks-each-quarter","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/why-we-watch-the-banks-each-quarter\/","title":{"rendered":"Why We Watch the Banks Each Quarter"},"content":{"rendered":"

We’re just over one week away from the start of earnings season. So, once again, it’s time to follow the banks.<\/p>\n

We watch the banks every quarter because the action in bank stocks tends to lead the action in the broad stock market – especially during earnings season. When the banks are strong, the market rallies. When the banks are weak, so is the stock market.<\/p>\n

That was the case last quarter. The KBW Bank Index (BKX) bottomed in mid-March and then started to rally. The Bullish Percent Index for the financial sector (BPFINA) generated a buy signal right at the start of earnings season. And, bank stocks held up all through their reports.<\/p>\n

That was a good sign for the broad stock market. The S&P 500 rallied from 6600 to over 7400 during the heart of earnings season.<\/p>\n

The current setup looks different.<\/p>\n

The major money center banks are scheduled to report earnings starting July 14. The market’s reaction to those reports will set the tone for this earnings season.<\/p>\n

The banking sector has been rallying for the past few weeks. BKX trades about 10% higher now than at the start of June. And, that action has some financial television talking heads wondering if the banks are set to rally through the summer.<\/p>\n

I suspect the banking sector is setting up a “sell on the news” event.<\/p>\n

The stocks are running higher now in anticipation of strong earnings reports. Investors are discounting the good news ahead of time.<\/p>\n

Look at this chart of the bullish percent index for the financial sector (BPFINA)…<\/p>\n\n

\"\"<\/figure>\n\n

In mid-March, the BPFINA generated a buy signal by turning higher from oversold conditions. This action helped to support a bank stock rally as we headed into the last earnings season.<\/p>\n

Now though, the BPFINA is in overbought territory (above 80). It will generate a sell signal when it turns lower from here – which could happen any day.<\/p>\n

This setup looks similar to the action in early January – just before the banks started to report earnings.<\/p>\n

BKX rallied 15% in December as investors discounted the likelihood of strong earnings reports. Then, as the reports were announced, and they were as strong as expected, BKX declined.<\/p>\n

Investors sold on the news. The bank index lost 17% in two months.<\/p>\n

A repeat of that sort of action this earnings season could be a bearish omen for the rest of the stock market.<\/p>\n

Let’s keep an eye on the BPFINA. If it turns lower from here, we’ll have a new sell signal for the banking sector. And, in turn, we’ll have another reason to be cautious on the broad stock market.<\/p>\n

Best regards and good trading,<\/p>\n

\"Signature\"<\/p>\n

Jeff Clark
\nEditor, Market Minute<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The action in bank stocks tends to lead the action in the broad stock market \u2013 especially during earnings season.<\/p>\n","protected":false},"author":2759,"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-27959","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"ai_tts_audio_outdated":false,"ai_tts_content_changed_at":"","ai_tts_content_changed_during_generation":false,"ai_tts_legacy_post":false,"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/27959","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\/2759"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=27959"}],"version-history":[{"count":1,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/27959\/revisions"}],"predecessor-version":[{"id":27965,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/27959\/revisions\/27965"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=27959"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=27959"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=27959"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=27959"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=27959"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=27959"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=27959"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}