The large financial Stocks have lead the markets lower throughout 2011. This morning, bank stocks around the world are declining sharply lower. The leading bank stock in the United States is J.P. Morgan Chase & Co. (NYSE:JPM). This market leading financial stock is declining lower by $1.92 to $34.56 a share. The low for JPM stock was made last week at $33.69 a share on August 9, 2011. This low is going to be a critical level for JPM to hold as support. Believe it or not, as long as this low is not breached on a closing basis JPM stock could still possibly form a possible higher low pattern on the daily chart which could turn out to be short term bullish. These are the little things that technical traders watch for. Sure, the stock market is down sharply this morning, however, this is sometimes how short term lows are carved out. Most lows are made with a higher low chart pattern setup.
Many other leading financial stocks are declining sharply this morning. Stocks such as Credit Suisse Group (NYSE:CS), UBS AG (NYSE:UBS), and HSBC Holdings plc (NYSE:HBC) are near new lows for the year. These are all European bank stocks that have large global exposure. These stocks will also give us clues to see if the major stock markets can hold the recent that were made last week. As long as these leading banks hold up the major stock indexes could continue to trade above the recent lows. If these leading bank stocks break down the major stock indexes could see steeper declines in the near term.
The stock markets are going to be very vulnerable throughout the rest of the year. As a trader, it is important to simply be on the right side of the trade at the correct time. Options expiration is also on Friday, therefore, this market will have increased volatility into the close on Friday afternoon. The large financial stocks will tell us everything we need to know for the short term.