Watch The Big Banks (XLF) For Direction

If you want to know when a recovery is coming, keep your eyes on the big banks (

) over the next few months. The market is looking for leadership and the banking sector needs to provide it. Banks led us into this economic downfall and banks need to lead us out. Banks are a great barometer of how the economy is doing as a whole. Banks provide loans which fund new enterprises and company expansion. Banks grant credit to consumers which finance home purchases, auto loans, and education. If you want to know how soon our economy will recover then look at the quarterly earnings of Bank of America (

), JP Morgan Chase (

) and Wells Fargo (

). As long as lending is down, charge-offs are high, and the consumer is financially stretched, and our economy will remain in the doldrums.