Regional Bank Stocks a Ball and Chain for Bull Market

stock market rally going higher etfs breaking out image august 4

With the Russell 2000 Index breaking out over the 50 and 200-week moving averages, investors should see nothing but blue skies, right?


There are lots of positives based on hope, of course.

The Retail Sector (XRT), as featured a while back, is doing well.

The Semiconductors Sector (SMH) is on the road less traveled to new all-time highs. Transportation (IYT) faces a critical test at the 200-WMA. And Biotechnology (IBB) consolidates over the 5-year breakout.

So, what’s up with the Regional Banks Sector ETF (KRE)?

Should we worry?

Regional Banks stocks as represented by the ETF KRE are in a bearish phase.

The sector is having 2 inside weeks.

Two scenarios are likely from here.

First, yields rise a bit, dollar strengthens, and the banking sector sees money rotation into it.

Second possible scenario is that as the bankruptcies increase, the corporations get stronger while the populace gets poorer, KRE reflects the more insidious potential of the market-the one where an increasing jobless market coupled with social unrest becomes the “storm the Bastille” of the 21st century.

Or, the one where the house of cards comes tumbling down.

There is a third possibility that does not entail money rotation or a market crash…

The end of banking as we know it, where alternative currency replaces paper money and folks find new ways to borrow and save.

S&P 500 (SPY) 325 now pivotal support 332.58 a gap to fill 

Russell 2000 (IWM) 150 pivotal

Dow (DIA) 270 resistance 262.50 support

Nasdaq (QQQ) Low volume on new highs 170 pivotal

KRE (Regional Banks) 38-40 resistance to clear 

SMH (Semiconductors) 165-168 pivotal support as it busts out of an ascending channel

IYT (Transportation) 179-180 resistance 

IBB (Biotechnology) 142 resistance 136 support

XRT (Retail) 50.00 resistance 

Volatility Index (VXX) 27.92 the 200-DMA broke today

Junk Bonds (JNK) Risk appetite on but not as hungry

LQD (iShs iBoxx High yield Bonds) 137.50 support

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The author may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.