By Chris Kimble
Banks had much to do with the broad market decline from late 2007 to 2009, as the Bank Index lost over 80% of its value. In 2012, the chart below illustrates that the Bank Index gained almost twice as much as the S&P 500 Index.
Over the last three years, the Bank Index could be forming a bullish inverse head-and-shoulders pattern. The potential neckline (1) continues to be important falling resistance since 2010. If the pattern read happens to be correct, a break of the neckline would be a positive for both the index and the broad market.
Click to enlarge image.
Will banks pull the broad market higher in 2013? I would want to own them if a breakout takes place.