Banking Index Sets Thirteen Year Low And Closes In On 1995 Pivot

Chart of the Banking Index courtesy of the always marvelous Stockcharts.com

How many times have we written on here that the banking system is still deteriorating and has not bottomed? Not only has the Banking Index dropped 75%, on Wednesday and Thursday it set new cycle lows, it set thirteen year prices lows and is now closing fast on its 1995 price pivot. We would already be there were it not for government bailouts. In fact, the banking index would, for all practical purposes, likely be zero. (I am very happy that is not the case and you should be too.) There is absolutely no reason why the S&P should not eventually follow. Our guesstimated downside of the 1995 price pivot of 400-450 on the S&P 500 is still intact.

In closing, I do not anticipate the S&P will reach the 1995 price pivot in 2009. As we have discussed, I believe any intermediate downside risk will be contained to the 600-724 level.