Skip the Graduation, Stick With The Cool Bank Stocks

• Posted by Greg Harmon
• on June 20th, 2011

Today PNC Financial (ticker: $PNC) revealed that they are buying Royal Bank of Canada’s American banking operations. A nice story of a regional bank getting bigger and hopefully stronger. Graduating to a new level. But the news acted as a catalyst to drop the stock price out of its Bear flag lower (chart below). Probably not what the CEO wanted to see. But the chart has been broken

for a while. With 58.77 as a stop you could look for a run lower to support at 54.60 or the longer term support/ resistance level at 50.30. The falling Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) growing more negative support more downside.

Cool Regionals

If you don’t short that is fine there are plenty of other regional that are doing just fine. Here are four to take a look at.

FirstMerit, ticker: $FMER

FirstMerit is at resistance at 16.00. If it can get through that level then it has resistance higher at 16.50 and then 17.25 and 17.75. The RSI is trending higher and the MACD indicator has just crossed positive, both support further upside for the stock.

Regions Financial, ticker: $RF

Some will point out that Regions Financial is in a bear flag as well, but it is showing some signs of breaking the flag higher. The volume is increasing in the flag, the MACD is crossing positive and the RSI has been trending higher. If it can get over 6.20 then it has resistance at 6.5 and 6.78 before 7.00.

Valley National Bancorp, ticker: $VLY

Valley National is moving higher and about to test the previous resistance at 13.55. AS it moves higher the RSI is trending higher and the MACD is crossing positive while the Bollinger bands expand for the move. If it can get over 13.55 then it has resistance at 13.80 and 14.25 on the way to a target of 15.40.

Zions Bancorporation, ticker: $ZION

Zions is moving higher and over it’s 200 day Simple Moving Average (SMA). It has more room to resistance on the upside at 24.10 and then 24.60 and 25.40 if it can get through. The RSI trending higher and the MACD crossed positive support more upside.

Basket Trade

Another way to play this space is to use a basket trade. Buying 1 share each of the Cool Regionals, $FMER, $RF, $VLY and $ZION, and then selling short 1 share of $PNC. This will only cost $2.09 based on Monday’s closing prices. If $PNC finds a bottom then drop it from the basket and continue to hold the Cool Regionals long or unwind the whole trade.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus