After large moves lower on Friday and Monday, the SPDR S&P 500 ETF Trust SPY traded up almost 1.5% Tuesday. But the market may still be in trouble.
An important reason for the move higher was the strength in the financial sector. But the bank stocks are still below an important level. This resistance could put a pause to the move higher in the broader market.
The $50 level was important support for the SPDR S&P Bank ETF KBE. Now, after the selloff, the shares are trading below $50.
This means investors who bought at $50 and haven’t sold are losing money. Many of them decide they want out, but they don’t want to take a loss.
As a result, they will be placing their sell orders right around the $50 level. If there are enough of these sellers, it will form resistance. This could put a ceiling on KBE.
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