Bank Stocks Nearing Key Price Target
After a stellar run since 2022, banks approach resistance levels—while materials quietly build strength beneath the radar.
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I am terrible when it comes to narratives about the market, although I confess I am always quite happy to hear the reasons that folks give for a move in the market. There was a time that no one cared for the energy names, and now they do.
Well, not everyone does. That will take a long time to convince them that this group is worth their time. The same way the banks, which have been terrific since bottoming in 2022, are all of a sudden thought of as ‘the’ story for 2026, more than three years after their bottom.
Oh, sure, they had that blip in 2023 with the Silicon Valley Bank blowup, but these stocks have been champs and only now is everyone talking about them. I'd like to do a little math for you, since I am just a simple chart reader.
On the chart of the Bank Index, we take the high of the pattern (140) and we subtract the low of the pattern (100), and we get 40. If we add that 40 on to the breakout at 140, we get 180. Okay, you’re wondering, should we really use that spike low in April or should it be more like 105 (on a closing basis). To me, it’s an area, let’s call the measured target on the Bank Index 175-180. On Monday, it got to (almost) 173.
Let me be clear: it hasn’t done a thing wrong, but it’s getting awfully close to a target. I have a resistance line right around here, and the chatter is loud. I would not chase the banks here.
You know what group I have yet to hear chatter about? Materials. Back in November, I highlighted that higher low in XLB as a positive. I even followed up a few weeks ago, asking for it to get over 46. It has done so, very quietly. I prefer when no one cares, and no one sees it.
As for Monday’s market, breadth was just okay. I mean it was the same net breadth on Monday as Friday, only Monday the S&P tacked on 43 points, and Friday it tacked on 13. Also Friday’s up volume was 71% while Monday’s was 67%.
And did you notice the VIX was green all day? I still think the VIX is due for a good jump in the next few weeks. Take a look at the chart, and you will see that almost every month we get some point where the VIX has a spike. In May, it jumped to 25. In June, it got to 22.50. July was to 19. Early August, it was back to 22 and so on. Yet December, the first down month in eight months, had no spike at all. It is due, in my view.
