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Stock Market's Current Rally Could End Soon -- Here's Why

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After Federal Reserve policymakers left interest rates unchanged at their meeting Wednesday but set the stage for a December rate hike, the banks stocks at last joined the party, breaking out of a base to the upside. The banks will do better in a rising rate environment to a point, and the KBW Bank Index closed up 3.5% for the session.

The bank stocks have a significant weighting in the S&P 500. After a period of underperforming the market off the recent lows, they look likely to participate in the near term especially if the Fed follows through and lifts rates in December.

Next, lets turn our focus to the S&P 500 itself. After breaking out of a double bottom pattern, the index continues to ascend. We would expect some resistance up in the 2100-2135 region, the previous high area that held for the duration of 2015. Also the daily relative strength index is approaching the overbought 70-plus region where moves often stall after an extended run.

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