One of the major concerns over the strength and direction of US indices has been the performance of the banking sector. Yesterday, KBE, the equally weighted index of US Banks traded below support but notably failed to accelerate despite heavy volume. Today's aggressive rebound confirms the failed breakdown of support and also forms a morning star. The inability of sellers of the last two days is of high significance. This price action now adds weight to the bullish outlook for US stocks as long as yesterday's low can hold.
This should open up some opportunities on the long side for the names in the space that are showing strong relative strength.