Separate Ways

We are matching spark and flame

Caught in endless repetition

Life for life, we'll be the same

--The Fixx

In technical analysis, a divergence is when two series or variables that are usually in sych aren't.

Major stock indexes such as the S&P 500 Index (SPX) have been marching steadily higher. The bank index (BKX), however, has not kept pace. Instead, it's been moving sideways to slightly lower over the past 3 months.

Given the centrality of the banking sector to our finance based economy (and economic problems), it will be interesting to observe how long this divergence continues. Seemingly, either the banks break higher (note that resistance rests immediately above at 45ish) and play catch up with the general market. Or the banks pull the general markets lower.

position in SPX