What's Driving Regional Bank Stocks Tuesday? KRE ETF Tests Key Resistance Amid Bullish Reversal Signals

Zinger Key Points
  • The SPDR S&P Regional Banking ETF (KRE) is testing the key technical resistance of the 50-day moving average.
  • KRE still trades 33% lower than its pre-crisis levels, but wide performance differences persist among industry players.

Regional bank stocks have enjoyed positive price momentum as concerns about the industry's survival and anxiety about deposit withdrawals have abated.

Tuesday marked the first time since the failures of Silicon Valley Bank and Signature Bank in March that the SPDR S&P Regional Banking ETF KRE, the largest ETF tracking a wide portfolio of regional bank stocks, approached a key resistance level marked by the 50-day moving average.

The regional bank stock gauge has already surged more than 20% from its lows on May 4, when it delivered a trend reversal signal commonly known as "bullish divergence on RSI" to technical analysts.

Banking equities reached fresh lows earlier this month, but the momentum indicator deviated from the price action and rebounded to the upside. This divergence is used by technical analysts to identify a potential bottom in a stock or index, since rising momentum in the RSI oscillator may suggest a depletion of bearish forces. 

As of the time of this writing, the regional banking ETF continues to trade approximately 33% below its levels prior to March's banking crisis.

Chart: SPDR S&P Regional Banking ETF Tests 50-DMA

Key Stocks Driving The Rally In Regional Banks

  • New York Community Bancorp, Inc. NYCB, the KRE ETF's biggest holding with a 5% weight, has seen its shares climb more than 90% from the lows in March.
  • Western Alliance Bancorporation WAL saw its shares rise over 400% since March lows and more than 200% since the lows hit on May 5.
  • Pacwest Bancorp. PACW has also risen over 200% since the lows hit on May 4.
  • First Citizens BancShares, Inc. FCNCA has skyrocketed 165% since March lows, and extended to fresh all-time highs last week.
  • Zions Bancorporation ZION has gained 60% since the lows hit on May 4, while Comerica Inc. CMA rose 45%. 

Regional Banks Still Trapped Near The Lows

  • First Horizon Corporation FHN has risen 25% from the 2023 lows, but continues to trade over 50% lower than the pre-crisis levels.
  • KeyCorp KEY is up 20% since lows, but still 43% lower than the pre-March levels.
  • TFS Financial Corp. TFSL trades only 5% higher than its 2023 lows. 

Read next: Jamie Dimon Says JPMorgan's Stint Of Buying Struggling Regional Banks Is Likely Over

Photo via Shutterstock. 

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