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Regional Bank Index Not Optimistic - Real Time Insight

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 billion.

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 Report

HUNTINGTON BANC (HBAN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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