These past weeks have shown much volatility and many tradable swings in the market. As a whole, the major indices have made new yearly highs and/or are ready to challenge highs reached earlier this year. Even the Russell 2000 which has lagged the rest of the market is ready to break to the upside. Keep your eye on the Bank Stock Index (BKX.X) as this index is still looking like it is trying to find a bottom. Although the market indicators such as the Stochastics and MACD are beginning to show it is ready to follow the other indices higher. Banking stocks NEED to participate if this market will move higher. And it will be a sign that the economic recovery is on more stable ground.
Inflation is still relatively benign, interest rates remain at historic lows, and gold has broken down from its recent parabolic rise. The majority of banks are well-capitalized and the TARP fund has been declared a "success" by Washington. (They now want to spend TARP funds on other government projects). All of these are good potential signs for the banking industry, except for Washington's desire to keep spending money. The dollar has shown that it is not in a free fall which remains good for the multinational corporations. A low dollar remains a good potential for earnings overseas. For now, these are historically bullish signs for the market.
Note: The above is for information purposes only. Any decision to buy, sell, or hold a specific investment for a portfolio should be reviewed by your personal investment advisor.
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