Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

The New World Of Investing SPDR KBW Regional Banking KRE ETF

Companies / Exchange Traded Funds Nov 19, 2009 - 02:54 AM GMT

By: Guy_Lerner

Companies

Best Financial Markets Analysis ArticleIn this new era where fundamentals seem to matter less and less, here is an ETF that seems to fit right in with that theme. It is the SPDR KBW Regional Banking (symbol: KRE) ETF.

It isn't lost on me that the local or Main Street economy is in the toilet. All I need to do is drive down the nearby 4 lane road with all the malls and strip centers to know that "things" aren't that good, and they are unlikely to improve any time soon. After all, how many tortilla restaurants and nail shops can one locale support? Who is going to fill all those empty stores?


Like all of you, I read about the increasing number of bank failures, the impending commercial real estate crisis, the high unemployment rate, and the increasing number of home foreclosures just to mention a few of our economic pleasantries. It would seem that none of this is good for the regional banks, who have been treated as pariahs as the Wall Street Money Center banks garner all the monetary stimulus from Washington. But when looking at the charts, the SPDR KBW Regional Banking ETF or KRE is the kind of equity that stands out.

Welcome to the new world of investing. The fundamentals are stinky, but the chart looks great. Maybe all those fundamentals are baked in to the cake?

Before looking at the charts, here is a CNBC video of banking analyst Meredith Whitney; the video is interesting in and of itself, but what caught my attention occurred just before the 5 minute mark when she spoke about last year's trade and this year's trade in the banking sector. (Thanks to Trader Mark at FundMyMutualFund for bringing the video to my attention.)

Last year's trade was to go long the Money Center Banks and short the Regional Banks, and in essence, that is how things shaped up as the big banks gained over 100% from the March lows and the Regional Banks only notched a 50% gain. Whitney now believes that the two sectors will converge although she does stop short in that she does not give an endorsement for the regional banks.

Another factor to consider is insider buying. According to InsiderScore, there has been "buying at battered Regional Banks and in other less glamorous pockets of the Financial sector," and this buying has been to an extreme. One caveat, however, is that financial company insiders timed their buys poorly in the recent bear market.

With this in mind, let's look at two charts!

Figure 1 is a weekly chart of KRE. Price is basing along the 40 week moving average, which is now turning up. A weekly close above the pivot low (at 21.08 and marked with blue up arrows) would be a positive, and this would also represent a close over 3 pivot low points, which I would also view positively. A weekly close over the trend line formed by two prior pivot highs (at 22.43) would likely catapult prices to the $30 level.

Figure 1. KRE/ weekly

As far as a stop loss goes, I would look at a monthly chart. See figure 2. I would use one of two things: 1) either a monthly close below the pivot high point at 20.86; or 2) a monthly close below the simple 10 month moving average.

Figure 2. KRE/ monthly

In sum, I like the Regional Banks and the KRE. It has been a relative under performer, and maybe some of that "hot" may rotate to this sector. Insider buying is a plus as well.

    By Guy Lerner

      http://thetechnicaltakedotcom.blogspot.com/

      Guy M. Lerner, MD is the founder of ARL Advisers, LLC and managing partner of ARL Investment Partners, L.P. Dr. Lerner utilizes a research driven approach to determine those factors which lead to sustainable moves in the markets. He has developed many proprietary tools and trading models in his quest to outperform. Over the past four years, Lerner has shared his innovative approach with the readers of RealMoney.com and TheStreet.com as a featured columnist. He has been a regular guest on the Money Man Radio Show, DEX-TV, routinely published in the some of the most widely-read financial publications and has been a marquee speaker at financial seminars around the world.

      © 2009 Copyright Guy Lerner - All Rights Reserved
      Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

      Guy Lerner Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules