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Investment Insight Daily Stock News

Bank Earnings Up — Time to Look at Regional Banks ETF

Starting with the Jeffries Group 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, all report earnings.

In my 2024 Outlook and this Year of the Dragon, Raymond Lo 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, Reuters

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

Mish and Maggie Lake discuss inflation (given the wage component in the payroll report), Bitcoin (given the looming deadline for ETF news), the market outlook, small caps, and emerging markets on this video from Real Vision.

Mish covers war, energy, food and a pick of the day on Business First AM.

On the Tuesday, January 2 edition of StockCharts TV’s The Final Bar, Mish (starting at 22:21) talks small caps, retail, junk, and why all three matter in 2024 a lot.

In this appearance on BNN Bloomberg, Mish talks a particularly interesting chart, plus other places to invest in 2024.

In this appearance on Fox Business’ Making Money with Charles Payne, Mish talks with Cheryl Casone about Bitcoin’s volatility and why EVs may not be such a great place to invest in right now.

Recorded on December 28, Mish talks about themes for 2024 to look for, and tells you where to focus, what to buy, and what to avoid depending on economic and market conditions on Singapore Breakfast Bites.

Mish sits down with 2 other market experts to help you prepare for 2024 with predictions, picks, and technical analysis in StockCharts TV’s Charting Forward special.

Recorded December 27, Mish gives you a quick snippet of the overall macro prediction for 2024 on The Street with J.D. Durkin.

Coming Up:

January 22: Your Daily Five, StockCharts TV

January 24: Yahoo! Finance

Weekly: Business First AM, CMC Markets

ETF Summary

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.

Mish Schneider

Director of Trading Research and Education

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