• 257 days Will The ECB Continue To Hike Rates?
  • 258 days Forbes: Aramco Remains Largest Company In The Middle East
  • 259 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 659 days Could Crypto Overtake Traditional Investment?
  • 664 days Americans Still Quitting Jobs At Record Pace
  • 666 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 669 days Is The Dollar Too Strong?
  • 669 days Big Tech Disappoints Investors on Earnings Calls
  • 670 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 672 days China Is Quietly Trying To Distance Itself From Russia
  • 672 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 676 days Crypto Investors Won Big In 2021
  • 676 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 677 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 679 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 680 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 683 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 684 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 684 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 686 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

Baromarket Pressure

Follow the money and you can typically arrive at the genesis of your surroundings. Here is another ratio chart that utilizes the S&P 500 Bank Index from Goldman. While I usually watch the BKX or the XLF for baromarket pressure differentials (yes - I did just create that terminology), the GSPBK goes back a bit further and yields greater perspective to the ratio.

As you can see, the banks considerable underperformance over the past year has become a worrisome trend. And while the previous bear markets (1990 & 2002) had similar low pressure zones - they eventually snapped back with great strength to lead the broader market higher.

GSPBK:SPX Ratio

Granted, they eventually rolled over with some similarity to the current ratio's technical predicament - but it was after a much stronger relative performance trend.

This has everything to do with the interest rate environment transition we are approaching.

As described in my previous work on the transition to a market environment with a less accommodative Fed - both the 1994 and 2004 tapes exhibited diminishing leadership from the banks.

The conundrum is that the ratio is running out of downside field position.

Literally.

If we don't start splitting the SPX or reverse splitting the banks, like Citigroup - it could flatline in a few years...

(and yes, I am joking and realize there would be no difference - just the same old ham sandwich)

More to come in this line of thinking.

 

Back to homepage

Leave a comment

Leave a comment