When Will the Financial Sector Bear Market End?

The banking sector and select bank stocks have been put through the ringer since the March selloff, sorely lagging the broader stock market. 

While the stock market has rallied with strength since then, the Regional Bank ETF (KRE) still looks in need of help.

One thing to note, however, is that JPMorgan (JPM) and Goldman Sachs (GS) reported Q3 earnings stronger than expectations.

While JPM and GS are not part of the KRE (they are part of the Financial Sector ETF – XLF), it does give a hopeful view of more Q3 earnings to come. 

regional banks financials etf kre bear market analysis chart image october

Above is a daily chart of the Regional Banks ETF (KRE) with our RealMotion Indicator. 

Real motion is a momentum based indicator, which in this case shows a partial improvement as the 50-DMA crossed over the 200-DMA before the price did on the chart.

It is still under the 0.00 black line, showing it still has an overall negative momentum. 

This makes it evident how important it is for the price to clear resistance at the $40-41 level and hold.

We know the Fed will keep rates low til at least 2023, giving room for people and businesses to borrow money at some of the best rates possible.

What is still a factor is if and when new stimulus money comes into play. Will it play a role in fresh business debt and consumer loans?

Or does the hope of a vaccine hold more weight as businesses will feel more secure going forward knowing they have a more stable environment? 

There looks to be a road to recovery in the works, whether it be through the vaccine or stimulus, but for now focusing on the earnings will give us the first light into what to expect in this sector. 

Technically, KRE is in a Recuperation phase as long as it holds the 50-DMA or 38.21. A move over 41.00 would reverse a long term negative trend going back to the beginning of 2020.

Here’s Mish’s video on the energy sector: 

S&P 500 (SPY) Broke 350.50 and now we could see a move to 343.

Russell 2000 (IWM) 159 next support

Dow (DIA) 282-283 next support

Nasdaq (QQQ)  held 292 just where they needed to and have continue to do so.

KRE (Regional Banks)  38.20 the 50-DMA support

SMH (Semiconductors) Held up better with 183 support

IYT (Transportation) Close green leaving the impression that this is a gentle correction after a big move up

IBB (Biotechnology) 140.50 Support 

XRT (Retail) with a possible reversal top pattern if closes Thursday under 53.86

Twitter: @marketminute

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.

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