Regionals: Best of a Bad Lot or Signs of Turnaround
- Posted by Greg Harmon
- on April 25th, 2011
Bank Stocks have had horrible performance lately. But if you look closely there are a few regional banks that have started to base and maybe getting ready to be the first to move higher. These are Huntington Bancshares (ticker:$HBAN), PNC Financial (ticker:$PNC) and Regions Financial (ticker:$RF). All three banks reported earnings last week and did not drop any further finishing the week off of their lows. Pathetic but yes that is what it has come to in the banks. Let’s take a look.
HBAN had been basing at the 6.37 level that had been both support and resistance in the past as noted by the dotted blue line. After reporting earnings it got a slight lift and is now approaching resistance at 6.74. The Moving Average Convergence Divergence (MACD) indicator is about to cross positive, but the Relative Strength Index (RSI) is rejecting at the mid line for the second time. If this can reverse and move higher then HBAN has a chance to break through that resistance at 6.74 and move higher to 6.90 and then 7.15. This is one of the best in the sector.
PNC found support at the rising trend line and held above it Monday right at the rising 100 day Simple Moving Average (SMA) . The MACD is improving , but like HBAN, the RSI has rejected at the mid line. It is not out of the bearish woods yet. You could take a flyer on it with a stop at the trendline or wait for it to clear the 50 day SMA with resistance higher at 63.91 and then 64.90 before some clear air.
RF is the worst looking of this crew, but recently caught a lift from the 100 day SMA that has recently crossed the 200 day SMA higher. If it can get through the long term support/resistance line at 7.40 then there is resistance higher at 7.50 then .70 and then 8.00 before free air to the 8.55 long term support/resistance level higher. The RSI is trying to break into bullish ground and the MACD is about to cross positive so it stands a chance.
A few financials to put on the top of the list that will lead the reversal higher, when it comes. But perhaps the most promising is FirstMerit (ticker:$FMER) which I left off because it reports before the open tomorrow.
FMER has also found support at previous levels at 16.50 ahead of earnings. But unlike the others, the MACD is about to cross positive and the RSI is rising as it approaches the mid line. It could pull a U-turn and and reject lower, but it also printed a bullish engulfing candle Monday right at the 50 day SMA. Through that there is resistance at 17.25 and 17.77-.79 before daylight to 18.50, 19 and 20. They are expected to report at 7:30 Tuesday so watch and be ready.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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