The financial-related sectors continue to outperform the rest of the market as investors and traders are preparing for higher interest rates to drive these stocks higher. The market’s recent weakness has several these companies taking a rest after their respective earnings announcements.
According to the charts though, these rests are just an opportunity for traders to position themselves for the next step higher in companies like Fifth Third Bancorp (NASDAQ:FITB), Huntington Bancshares Incorporated (NASDAQ:HBAN) and Regions Financial Corp (NYSE:RF).
Fifth Third Bancorp (FITB)
This regional bank has been tearing-up the market as Fifth Third shares are up more than 70% over the last twelve months. FITB stock is in the process of matching prices from 2008 on its trek higher, but it is far from its all-time highs at $70.
The breakneck rally that led into November took Fifth Third shares to an overbought level that stalled their climb. Since then, FITB stock has spent a lot of time consolidating, which helped work off the crowded technical signal. Now, with earnings behind it and a short period of selling that took it from $28 to $26, Fifth Third shares look ready to rally again.
FITB shares moved above their 50-day moving average on Tuesday, a move that will catch the attention of chart watchers. In addition, Fifth Third stock’s 20-day moving average is set to cross above the 50-day, a pattern that hasn’t happened since July 2016. After that instance, FITB stock started a rally that led it from $18 to $21.
Watch for the short-term resistance to open-up and allow Fifth Third stock to break higher again.
Huntington Bancshares Incorporated (HBAN)
Like the other regional banks, Huntington shares have outpaced the market by roughly 40% over the last year. HBAN stock saw a surge higher last week after a positive earnings report, only to have sellers step in and sell the news for profits.
Now, after retreating 6% from their highs to support at the 50-day moving average, Huntington stock appears ready to make the move to the next higher level.
Volume on HBAN shares is picking up as some of the analyst community is taking an affection to the stock. Currently, only 44% of those covering the stock consider it a buy. This is true despite the strong fundamental and technical backdrop.
Look for this uncrowded trade to break to new 52-week highs as Huntington stock benefits from support from the 50-day and a break above the $14-level, which has been technically significant according to the HBAN charts.
Regions Financial Corp (RF)
Rounding out our look at the regional banks are Regions Financial shares. Unlike Fifth Third and Huntington, RF has been playing against a hard ceiling at the $15-level for more than a month. This price is now getting significant pressure from the rising 20- and 50-day trendlines. In other words, something is going to crack for Regions Financial, and its likely to be the overhead resistance.
RF shares put a quick pullback in just ahead of earnings, a move we love to see, as investors sold the rumor ahead of the earnings report. As with many of these situations, the crowd had to correct itself when the earnings report was in-line with expectations.
Now, with pressure building from the rising trendlines, Regions Financial stock is preparing a breakout above the $15-mark, which should attract a new wave of buying volume in the stock. After this break, our charts expect a quick move to $16 (a 6.7% move in RF stock).
As of the time of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.