Institutional Investors have one special index that they look to when trying to measure the strength of the economy.

What's the Index and why do they favor it?

It is the S&P 500 because it is the index with the broadest array of sectors that give a clear composite view of economic conditions.

Take the Financials for example. They have been hit hard, have needed Government bailout money, and are more than likely over valuing their assets at this point. So this has been a sector in turmoil and because it is an important part of the S&P's makeup, it has an influence on the S&P's trending and strength.

How much of the S&P 500 is made up of Financial stocks?

The answer: 10.81% (The percentage and breakdown of the other sectors can be seen on the chart below.)

Okay ... Financials are important relative to the action of the S&P 500.

What is the Banking Index doing now? (Symbol: $BKX)

Is it trending up or down?

Is it helping or hurting the S&P 500?

Is it at an important juncture now?

Here are the answers with the chart below:

1. The Banking Index is trending up, so it is helping the S&P. It started its up trend the week of March 9th.

2. Is it at an important juncture now? The answer is yes as seen on the chart. Note that the Banking Index is showing a short term down movement, but that movement will soon be approaching a major support line.

More importantly, the pattern now is a triangular pattern. Note how the index has touched the upside resistance 3 times so far. In fact, the third (and current touch) shown was at 10 AM this morning.

What is clear about this hourly chart, is that the intersection of the resistance and support is close at hand.

It is at that point, that the Banking Index has to break out of the triangular pattern. When that happens, it will have an impact on the market and the S&P 500's direction.