Stock Markets Analysis & Opinion

Regional Banks Approach 23-Month Moving Average: What It Could Mean for the Sector

Yesterday I wrote about Alibaba (NYSE:BABA) and the 23-month moving average ahead of its earnings report.

Now that it did report, to repeat,

Clearly, choice 3 is what we are watching to see if that area holds or not.

Now, we have a similar situation with one of our Economic Modern Family members, our Prodigal Son, Regional Banks KRE.

To review, KRE was the first sector in the Family to signal a warning in March 2023 that something was amiss.

As other sectors were running to new highs, KRE did not clear the 23-month moving average, but also broke below the 80-monthly MA, setting the stage for a big correction on news of bank failures.

Since then, KRE has not been able to return back over either of these key monthly moving averages.

Til now???

The 23-month MA sits at $51.30.

However, we must note that on a shorter timeframe, KRE is trading at its highest levels since January 2024.

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Therefore, we do have momentum.

Hence, while KRE has been in contraction really since 2022, it now stands a chance of going into expansion.

We are not there yet, but keep your eyes on

  1. KRE holding $49-50
  2. KRE closing the month over the 23-month MA and holding there

ETF Summary

  • S&P 500 (SPY) Near all time highs over 524
  • Russell 2000 (IWM) 202 support now with 210.80 ATHs
  • Dow (DIA) 387 support and 400 resistance
  • Nasdaq (QQQ) 437 key support 449.34 ATHs
  • Regional banks (KRE) Compelling but not there yet
  • Semiconductors (SMH) 230.05 ATHs
  • Transportation (IYT) 64 support 67 resistance -still relatively weak
  • Biotechnology (IBB) 135 cleared next resistance 137
  • Retail (XRT) 80.10 high today is the new 2024 high with 75 key support
  • iShares iBoxx Hi Yd Cor Bond ETF (HYG) Back over the 50-DMA now much hold


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