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Regional Bank Index Breaks Out to Upside


The financials led the market higher coming out of the March lows, had a classic 50% pullback and retested the highs before drifting into the triangle pattern I’ve drawn on the chart.

On average, break-outs from the triangle pattern occur in the primary trend direction 2/3 of the time. The average move from the break-out if its a move up is about 30% and if its a down move is about 20%.

In our case, the primary trend is up from March 9th, so if we have an average move in the regional banks prices you could see this eft of the regional bank index move to $27. Again, this is just the average move – which means it could be much more or much less.

One more caveat, we always have to be cognizant of the 3-day or 3% rule: no break-out or crossing of a resistance/support line is effective until it has maintained the breakout for at least 3 trading days or moved 3% past the line.

More on the regional banks as their rally develops.