The regional banks are beginning to attract the attention of chart watchers as technicals improve along with the fundamental backdrop for these companies. Namely, the fact that interest rates are likely to continue their climb and talk of financial regulatory reform is picking back up.
Fifth Third Bancorp (FITB)
Cincinnati-based Fifth Third Bancorp has started an intermediate-term recovery that suggest the stock is ready to take leadership in the market and sector again.
- FITB shares recently found support at their longer-term 200-day moving average, which is trending higher.
- The 50- and 200-day moving average are both sitting at the $24.50-mark, which builds a case for Fifth Third Bancorp to find support at this price point in case there is a short period of selling.
- Interestingly, FITB is one of the least recommended stocks by the Wall Street analysts following it. Currently only 5% of the analysts tracking the stock have it ranked a buy. Lots of room for upgrades here.
Like FITB, KeyCorp shares are emerging from a consolidation period. After a strong rally in the fourth quarter of 2016, KEY shares traded in a wide range as the market started to doubt the Trump administration’s ability to push forward with reform.
Now, KeyCorp shares look to move higher.
- KEY shares are preparing to break through $19, a price point that has held strong chart resistance since February. A move above this level will attract new technical buyers.
- KeyCorp’s 50-day moving average is preparing to cross above its 100-day moving average. I call this a “Silver Cross.” The cross is evidence of an improving trend in the price. The last similar Silver Cross happened in September 2016, just before the stock made a huge rally from $12 to $16.
- Watch for a short-term test of $18 to represent a possible launching pad for the next 5-10% move in KEY shares.
PNC Financial Services Group Inc (PNC)
A similar technical picture is brewing with PNC shares as this regional leader is transitioning into an intermediate-term bullish pattern.
- PNC shares’ 50-day moving average is beginning to show signs that it is transitioning into an ascending pattern. Historically, this improves the stock’s odds of seeing a daily advance to 2:1 — great odds for any stock.
- Shares are threatening to break above $125 for the first time since breaking below this technically significant chart support in March. This move would attract technical buyers into the market with higher volume.
- PNC shares are a bit oversold at this point, from a short-term perspective. Given this, we’re expecting to see the stock pull back to $120 and then make a move to break through the top of its recent range into a new bullish trend to target of $130.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.