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Banks will lead Return of the Bear

|Includes:SPDR S&P 500 Trust ETF (SPY)

 

Featuring Richard Suttmeier, Chief Market Strategist
 
 
If you think that the Housing Market and Financials have bottomed think again. The homebuilders are just 4% undervalued and banking is 19.6% overvalued according to ValuEngine. The daily chart for the S&P 500 remains negative, but a return of the Bear Market has not been confirmed by the weekly chart yet.
 
The weekly chart for the Housing Market Index (HGX) remains negative with declining momentum and with the down trend clearly shown. A close today above the five-week modified moving average at 83.43 would be a ray of hope.
 Click to enlarge
Courtesy of Thomson / Reuters
 
The America’s Community Bankers Index (ABAQ) remains negative with declining momentum. A close today above the five-week modified moving average at 143.53 seems extremely unlikely. Bank failures reached 40 for the year and 65 for The Great Credit Crunch and I project 500 to 800 failures through 2011 and into 2012.
 
Click to enlarge 
Courtesy of Thomson / Reuters
 
The Regional Banking Index (BKX) is well below a two year downtrend with declining momentum. The only ray of hope would be a close today above the five week modified moving average at 36.44.
 
 Click to enlarge
Courtesy of Thomson / Reuters
 
The daily chart for the S&P 500 has a negative profile but is above its 50-day and 200-day simple moving averages at 901.91 and 895.68 with the 21-day as resistance at 925.48. Momentum is declining.
 
Click to enlarge 
Courtesy of Thomson / Reuters
 
The weekly chart for the S&P 500 remains positive but overbought, but my reason for long term bearishness is the down trends shown. A daily close below the five-week modified moving average at 908.60 would be a warning, but I still project that strength will fail between my annual pivot at 910.8 and my annual resistance at 967.1.
 
Click to enlarge 
Courtesy of Thomson / Reuters
 
If you have any comments or questions send them to Rsuttmeier@Gmail.com.
 
Make sure to visit ValuEngine.com for more products and services, and have a great day.
Stocks: SPY