Regional Banks and the 23-Month Moving Average

kre regional banking etf trading 23 month moving average chart

Yesterday I wrote about Alibaba and the 23-month moving average ahead of its earnings report. You can read that article right here.

Now that it did report, to repeat,

“The monthly chart is one of my favorites to look at, especially when one draws in the 23- and 80-month moving averages.

BABA ran right to the 23-month MA ahead of the earnings report.

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What could that mean?

  1. If the price clears, then we will assume that the stock has more room to run with a now 2-year business cycle expansion.
  2. If the stock does indeed gap higher, then we are looking for a move to around $100.
  3. If the stock comes in lower, we will use a support level of $77-80 to gauge the company’s health.”

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.

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

Mish appeared with this afternoon with Dave Keller of Stockcharts on Final Bar-have a listen.

Twitter: @marketminute

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