Last week I noticed the S&P Regional Banking Index ETF (KRE)
breaking down below its 40-week moving average, roughly equivalent
to the 200-day.
Here's a look at what I think could be the most important chart to
discuss this month, as far as index or ETF price charts go...
The KRE ETF is designed to be equal-weighted like the underlying
index, with an average market cap of $4.1 billion and an index
weighting of about 1.4% for each component. Some market caps in the
top 10 holdings are notably bigger than the average with Huntington
Bancshares (HBAN) at $8 billion and M&T Bank (MTB) at $16
But with 86 holdings there are quite a few small caps in there. And
that's what brought KRE so closely to my attention last week as I
dissected the weakness in the Russell 2000 index, which has a
Financial sector weighting of about 24%.
My question of the week for this "chart of the month" is this: Is
the weakness and possible topping process in regional banks a sign
of economic pessimism, or is it more about the yield curve falling
flat again instead of steepening, the way banks would prefer, to
increase their net interest margin?
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SPDR-KBW REG BK (KRE): ETF Research Reports
ISHARS-R 2000 (IWM): ETF Research Reports
M&T BANK CORP (MTB): Free Stock Analysis
HUNTINGTON BANC (HBAN): Free Stock Analysis
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