Banking sector can be traded, but position investors use caution

Traders, I believe that the banking sector might have completed the additonal new low in a diagonal down that often happens with an Elliott Wave ending diagonal. So with the usual trade techniques - indicators, volumes, and stop loss management - it can be time to start playing it from the long side.

Position investors should still be cautious. The chart pattern doesn't yet confirm that the additional new low doesn't itself need to play out with a small ending diagonal of its own, in which case it would still need to poke one or two slight additional new lows! It's obvious that making higher highs and higher lows is what the chart needs, and it can be getting resistance from moving averages as well as overhang resistance from prior swing low levels. Much damage has been done in these charts, and there are some individual companies that may never recover.

Therefore, the main reason why I keep an eye on it is that it's at the epicenter of the markets' malaise. Yes, I'm dabbling in some trading with it, but that's about it - I think it's too dangerous for swing traders to wade in. No uptrend will be confirmed unless and until the DMI-ADX crosses over with the green positive line above the red (negative volumes) line - hasn't happened yet of course ... as well as the Slow Stochastic on that special 39,1 setting moving above 20 and then, really, above 50. Here's the daily chart of the BKX banking index: