Goldman Sachs and the banking sector testing important levels

I might revisit my count on the banking sector as a whole, although it doesn't change my view of where it is now - specifically, I can see a clearer path to calling the downtrend done, but looking for the current rally to give way to an orderly pullback before giving (more of a) green light for position investing in the sector. Meantime, Goldman Sachs doing well of course. Pattern interesting in that, as it approaches its 200 dsma, the channel can be a parallel one, but may also have a wedge component that would be more bearish. Many eyes on GS of course that will be watching to see what it does at its 200 dsma:


And here's a look at the banking index - believe me I am not trying to talk it down, there's been a tremendous improvement in this sector and the equities markets generally as we can measure through the McClellan and other data. It's just that there are differences between investors and traders in terms of the types of lows people will buy, so I feel it important to reiterate the factors for caution. The bullish view is that the banking index did complete the last "ABC" down, so we should be seeing either wave 1 up or wave A up. The good rise is consistent with this view. The related idea is that we see a pullback which gives a great entry for an even better wave 3 or wave C up. Could that pullback have already occurred about the 50-day moving average level? Possibly. I just doubt it based on the underlying volumes and indicator levels, and the overhead resistance. If you think I'm wrong, you can be buying backstopped at the 50-day moving average. If I'm right, we'll see a deeper pullback that will give us a better swing long buying opportunity. Here's the BKX chart with my notes:

As always, be careful out there, and happy trading!