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“America was targeted for attack because we’re the brightest beacon for freedom and opportunity in the world. And no one will keep that light from shining.” – George W. Bush

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

After two positive days to start the week, futures took a breather today ahead of August CPI.  The numbers were just released and were practically all right in line with expectations. Headline CPI increased 0.2% compared to forecasts for a gain of 0.2%, but core CPI was slightly hotter coming in at 0.3% versus a forecast for 0.2%. On a y/y basis, the readings of 2.5% and 3.2% were in line with forecasts.

While the numbers were mostly inline (except for Core), futures have not responded kindly with equity futures adding to their pre-market weakness while treasury yields reversed higher.

Yesterday wasn’t a good day for the banks, and it hasn’t been much of a week either. Below we show a snapshot from our Trend Analyzer of the ten largest components of the KBW Bank Index. All of them are down over the last five trading days and are all down at least 2.5%.  Not only that but besides PNC and USB, the eight other stocks listed have all broken down through their 50-day moving averages.

The worst of the losers have been Wells Fargo (WFC), JP Morgan (JPM), Citi (C), Capital One (COF), and Trust (TFC) which are all down over 5%. 5% may not sound like much when you talk about tech or growth stocks, but it’s more than nothing when you’re talking about the largest banks in the country.

For the KBW Bank Index itself, the index has now failed just above 115 for the second time in two months, and like most of the components, it is also back below its 50-day moving average (DMA).

The 115 level hasn’t just been resistance in the last several weeks. If we take a further look back, the index has seen rallies fail at this level multiple times.  The chart below shows the performance of the index since mid-2022, and in addition to the two most recent tests of resistance, it also rallied up to that level in the summer of 2022 and early 2023 before pulling back.

Then finally on a longer-term basis, while there was a period during the post-Covid madness from early 2021 through early 2022 where the BKX rallied above 115 and got as high as the high 140s, before that, it also tested and failed levels in the low to mid 110s twice.

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