Trade of the Day: Look for Relative Safety in Regional Banks (KRE)

SPDR KBW Regional Banking (ETF) (KRE) — Exactly three months ago, I recommended traders buy KRE, which was trading just under $41 at the time. Since then, the ETF, which tracks the performance of the S&P Regional Banks Select Industry Index, has broken from a bullish saucer and jumped nearly 10%.

Some traders may be wondering whether it is time to sell. But the shaky international situation has institutional investors moving away from banks with global interests to the relative safety of the regionals. KRE meets their needs and has been under accumulation recently.

The fund’s top 10 holdings are Bank Of The Ozarks Inc (OZRK), Glacier Bancorp, Inc. (GBCI), Cathay General Bancorp (CATY), Hilltop Holdings Inc. (HTH), First Financial Bankshares Inc (FFIN), Citizens Financial Group Inc (CFG), BOK Financial Corporation (BOKF), SVB Financial Group (SIVB), Texas Capital Bancshares Inc (TCBI) and Signature Bank (SBNY).

Capital IQ rates KRE “overweight” in a universe of 804 ranked ETFs. The fund has an annualized dividend yield of 1.6% and a relatively low management fee of 0.35%.

On the chart, we see that following a consolidation in a bullish saucer, KRE broke the pattern to the upside, as expected, in May from a base line at about $41. The formation was supported by multiple bullish indicators, the most important of which was a golden cross in March.

My new buy under price is $43, and the target for the breakout remains $50. Therefore, traders could achieve a profit of more than 16% plus dividends.

KRE Chart
Click to Enlarge

Chart Key

Article printed from InvestorPlace Media,

©2021 InvestorPlace Media, LLC