Regional Banks For the Win

The banking sector has had a good 2014, but the regional banks, have not. Where the broad sector ETF XLF is up about 15%, the regional banking index ETF, KRE, is about flat. There is hope though heading into 2015.

kre

The weekly chart above shows the KRE breaking above resistance in February 2013 and retesting that breakout level in April 2013. From there it proceeded to rise over 40% into March 2014. The positive set up comes from a bull flag that developed the following 7 months.

The pullback touched the 100 week SMA the week that the broad market bottomed, and printed a Hammer, reversal candle. It was confirmed higher the next week and broke above the bull flag the following week. After a retest of the break out, price started higher higher again last week and is following through into the end of the year. The momentum indicators, RSI and MACD are both bullish and support more upside.

A continuation would look for a Measured Move higher to 50. That is a 25% move higher. Time for the Regionals to shine.

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