What is the Philadelphia Bank Index Telling Us?

There is an old saying that no market rally can be sustained for long without the support of the financial sector, especially banking stocks. The Philadelphia Bank Index has been doing poorly compared to the S&P 500 for several months. This relative strength chart shows that relationship for the last year.

According to classical technical analysis principles, a double top formed during June and August. The neckline of that double top has been decisively penetrated. If the ensuing downward movement equals the height of the double top, this ratio could decline all the way to the .0774 area seen last October.

I think this is a bad omen for the stock market in general and for banking stocks in particular.

The bank stocks I have been looking at appear to be overvalued 15 to 20%. Meanwhile they are facing serious obstacles: not only the well-known threats to making money in the banking business, like a slowing economy, a falling housing market, and an inverted yield curve, but also new threats, like peer-to-peer lending on the internet. This phenomenon is growing rapidly and has the potential to seriously disrupt traditional banking if internet giants like Google or Yahoo get involved.

I would not be surprised to see a sharp correction in the banking sector and a general market correction of 7 to 10% by the end of the year.

Advertisements

9 Responses to “What is the Philadelphia Bank Index Telling Us?”

  1. Small and Mid-Cap Bank Stocks « Alligator Investor Says:

    […] Bank stocks have outperformed the Dow for five years, but in the last three months the banking sector has started to sag badly against the Dow. The inverted yield curve and the depressed real estate market are making it hard for banks to sustain earnings. Many bank stocks have been hit hard and as I previously noted, the decline of the banking sector is also a bad omen for the overall market. […]

  2. urquoise Consulting : vente, conseil, formations et maintenance informatique pour Hôtel et restaurants, PME, PMI, Prof. Libérales située à Lille (59). Distributeur logiciel VEGA, Création de Sites Internet, Hotspot Wifi conformes à la législation, Says:

    urquoise Consulting : vente, conseil, formations et maintenance informatique pour Hôtel et restaurants, PME, PMI, Prof. Libérales située à Lille (59). Distributeur logiciel VEGA, Création de Sites Internet, Hotspot Wifi conformes à la législation, éq…

    […]What is the Philadelphia Bank Index Telling Us? « Alligator Investor[…]…

  3. Murweb vente de site web Says:

    Murweb vente de site web…

    […]What is the Philadelphia Bank Index Telling Us? « Alligator Investor[…]…

  4. depannage-informatique-Bagneux-92220 Says:

    depannage-informatique-Bagneux-92220…

    […]What is the Philadelphia Bank Index Telling Us? « Alligator Investor[…]…

  5. facebook hack password free download Says:

    I have been online on-line over a couple of hours lately, however i hardly ever identified every appealing report such as the one you have. It can be lovely price plenty of for me. Privately, if perhaps almost all online marketers plus writers manufactured excellent written content while you most likely have, the internet would be a lot more beneficial than before.

  6. facebook hacked Says:

    of course as if your site but the truth is must confirm the spelling in several of your blogposts. Many of possibilities filled along with punctuation troubles and i also to uncover the idea very problematic to inform reality on the other hand We’ll undoubtedly keep coming back just as before.

  7. manter Says:

    Their such as you read through my head! A person to know a whole lot relating to this, just like you submitted this e-book inside it something like that. I think you could do with some Percent to just make what it’s all about dwelling a bit more, yet other than that, it is excellent weblog. A superb examine. Let me unquestionably return to their office.

  8. Www.Youtube.Com Says:

    Appreciate it. I’ve been looking for this info. Excellent data I am going to check back with regard to more knowledge about Paleo Diet plan.

  9. microsoft office 2013 keygen free download Says:

    A person basically help to make significantly reports I would personally declare. This is the beginer My spouse and i used your internet site and also to this point? My partner and i astonished while using analysis you made to make this actual send amazing. Amazing course of action!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: