Banking sector index looks like toast - but we already suspected that

If you've followed our review of the banking sector index charts, you already know that in following the Objective Elliott Wave counts of Tony Caldaro - which yes, I've learned to respect greatly - the regional banking index (KBW) looked like it already topped its bear-market "b" wave rally but the larger bank index (KBE) hadn't ... yet. Meaning we've been watching the $BJX index to see if it had topped. Well today's morning swoon poked under the early September low, so I interpret that as dispelling any remaining hope that the early September lows were a wave 2 and this merely a wave 4. Simply an intraday pike, you ask, not to be counted? My view is that for Elliott Eave purposes, even the intraday poke seals the count. So, does the banking sector see new lows before new highs? Probably!

There can be a couple is ways that could change - one, if it now goes into an expanded flat b-wave up, but honestly I cannot see at all how that could fit pattern-wise. The other, more possible is if the next "c" wave low becomes truncated, only retesting "the lows" without poking under them. So your choices are - expect a very deep retrace, or new lows. Sorry!

But respect any oversold bounce that shows up first, especially since some indices may still have the firepower to struggle to one last new high (wonder if QQQQ can nail the $43.30/43.34?). A good bounce in the banking sector may show up alongside such an effort, before the next leg down.