I wanted to provide more detailed analysis of the recent BKX (banking index) breakdown so that you can be more confident in taking out new short positions when its constituent stocks bounce. Here is the 15 minute chart as of last Friday.
In short, the past 2 months appear to be a falling head and shoulders which is a particularly bearish pattern in and of itself. On the left hand side we see that on the way up we had a gap up. When a line is draw in for the neckline, that gap now shows more significant. That falling trendline meant something even all the way back then. And now direct your attention to the recent breakdown. It gapped down same as the left side gapped up. That makes the whole H+S also an island reversal.
Folks, this has "oh shit" written all over it. Short the pops and cover the drops. This will probably do an a-b-c to kiss the bottom of that rail on Monday but I expect it to play out in not more than 1 day before this turns back down. If the bankers go down, everyone goes down.
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