SPDR KBW Bank (ETF) (NYSEARCA:KBE) — This ETF generally seeks to track the performance of money center and leading regional banks of the S&P Banks Select Industry Index. It invests at least 80% of its total assets in the securities of the index. Over the past 12 months, KBE gained roughly 10% and has a yield of 1.6%.
S&P Capital IQ has an overall rating of “overweight” on KBE based on value and technical indicators. While its analysts rate it “market weight” for risk considerations, they also rate it “overweight” based on cost factors such as the expense ratio and price to NAV.
Its top 10 holdings are Bank Of The Ozarks Inc (NASDAQ:OZRK), Cathay General Bancorp (NASDAQ:CATY), Glacier Bancorp, Inc. (NASDAQ:GBCI), Citizens Financial Group Inc (NYSE:CFG), First Financial Bankshares Inc (NASDAQ:FFIN), Zions Bancorporation (NASDAQ:ZION), Hilltop Holdings Inc. (NYSE:HTH), SVB Financial Group (NASDAQ:SIVB), Western Alliance Bancorporation (NYSE:WAL) and Texas Capital Bancshares Inc (NASDAQ:TCBI).
In early May, KBE broke from an eight-month rectangle with high accumulation backed by a golden cross, a long-term bullish signal. The breakout was accompanied by twin buy signals from my proprietary indicator, the Collins-Bollinger Reversal (CBR).
Last week, the breakout was confirmed by a new high that resulted from the break from a small flag. On Friday, the ETF closed just pennies below its high of the day, confirming the strength of the breakout.
The target for the breakout is $40, 11% above Friday’s close. However, KBE is on fire and could go much higher since major resistance doesn’t occur until about $50, a level from which shares broke down in mid-2007. Buy KBE at the market price as a trade or long-term hold.