Banking on Banks

SPDR KBW Regional Bank ETF, (NYSE: KRE) has 50 banks in the index. Scanning through the list to quickly look at the charts, you see which are holding up and which are selling off or weak. The point of this exercise is to look for strength in the sector overall. You could also use this as a drill down to the stocks you would like to play. At this point my focus is more on the sector. The sector remains in an uptrend short term and some strength with the exception of Monday.

In the failed bill was a piece of legislation that helped the regional banks as a result of the Fannie Mae takeover. This would have helped or given these banks a small advantage in the lending process with capital. With the failure of the bill to be passed, several of these banks were hit hard in trading yesterday. Most bounced back today showing some strength overall. If the bill comes back in whatever form look for special dispensation to the regional banks.

SPDR KBE Bank ETF, KBE has 25 banks and like KRE has held up well inspite of the news. The trend here is more sideways versus up, but still worth watching near term as this plays out. While this is not an endorsement to run out buy these ETF’s, but I do think they are worth watching near term. For more information on the Chart of the Day follow the link.