Mish’s Daily: Bank Earnings Up – Time to Look at Regional Banks ETF
Written by Michele ‘Mish’ Schneider
Starting with the Jeffries Group reporting on January 9th, by Friday we will see Bank of America (BAC), JP Morgan (JPM), Wells Fargo (WFC), and Citigroup (C) as well as a few other banks report earnings.
In my 2024 Outlook and this Year of the Dragon, Raymone Lo, in his analysis for 2024 he writes, “The Dragon is considered a ‘Star of Arts.’ The industries that will perform better in the year of the Dragon will be industries related to Metal element and Wood element. Metal industries are banking…”
Hence, one can assume that bank stocks, which already started off the year extremely well, have potential to shine.
However, we know that assumptions can be tricky.
There are those who still believe credit issues with Regional Banks could put pressure on the financial markets.
“U.S. regional banks have a tougher road to growing profits in 2024 as they face pressure to pay more to depositors versus larger peers while demand from borrowers stays subdued.
With the outlook for interest rates more uncertain, regional lenders’ earnings will also be restrained because they are tied into securities holdings that are losing money on paper instead of making loans or investing in higher-yielding assets, said analysts.” Saeed Azhar
With KRE into strong resistance on the monthly charts, what should we be looking for this week?
S&P and Moody’s Investors Service cut credit ratings and revised outlooks for a slew of U.S. banks in recent months on the heels of the Silicon Valley Bank collapse reminiscent of 2008. Both agencies warned that funding risks and weaker profits will likely test the sector’s credit strength.
This is why watching the chart of KRE could be important.
While big banks prospered after the regional bank debacle, we know that more stress could be yet another pick-up stick for the economy, the Fed policy on rates and the stock market.
On the monthly chart, 54.00-55.50 is major resistance using the 23-month moving average (blue) and the 80-month MA (green).
That price level also corresponds to the “scene of the crime” from last March.
Ideally, bulls should feel safer in all the bank stocks if KRE can clear that resistance.
And we don’t want to see KRE fail 50.00 once earnings are reported.
I almost gave our Prodigal Son (yes in the economic modern family) up for dead.
Perhaps it been more comatose. Regardless, we shall know soon enough as earnings, support, resistance and the 6-month calendar range all align.
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Mish in the Media
Real Vision Daily Briefing Mish and Maggie discuss inflation (given the wage component in the payroll report) and Bitcoin (given the looming deadline for ETF news), SPY – market outlook. Why small caps are important, Emerging markets – VNM Greece, Watching China 01-05-24
Business First AM Mish covers war, energy, food, and a pick of the day. 01-03-24
Final Bar with Dave Keller Stockcharts Small Caps, Retail and Junk, Why all 3 matter this year a lot! 01-02-24
BNN Bloomberg What is a Commodity SuperCycle Really? Mish goes over one interesting chart plus places to invest this year 01-02-24
Fox-Making Money with Charles Payne Cheryl Casone Hosting Mish covers volatile bitcoin and why EVs may not be such a great place to invest in right now 01-02-24
Singapore Breakfast Bites Mish talks about themes for 2024 to look for-and tells you where to focus, what to buy or avoid depending on economic and market conditions December 28, 2023
Charting Forward with Stockcharts and Dave Keller-Mish sits down with 2 other market experts to help you prepare for 2024 with predictions, picks, and technical analysis. December 28, 2023
January 22 Your Daily Five Stockcharts
January 24 Yahoo Finance
Weekly: Business First AM, CMC Markets
S&P 500 (SPY) 480 all-time highs 460 underlying support
Russell 2000 (IWM) 195 pivotal 180 major support
Dow (DIA) Needs to hold 370
Nasdaq (QQQ) 390 major support with 408 resistance
Regional banks (KRE) 47 support 55 resistance
Semiconductors (SMH) 170 cleared with this sector back in the lead
Transportation (IYT) Needs to hold 250
Biotechnology (IBB) 130 pivotal support
Retail (XRT) 70 now key and pivotal