Bank Profits Rise – Time to Look at Regional Bank ETFs | Mish’s Market Hours

Starting with Jeffries Group on January 9th, Bank of America (BAC), JP Morgan (JPM), Wells Fargo (WFC), Citigroup (C) and several other banks are all scheduled to release reports by Friday. income.

In my Forecast for 2024 and This Year of the Dragon, Raymond Lo writes, “Dragons are considered ‘stars of art.’” Industries that will perform better in the Year of the Dragon will be those related to metal and wood elements. The metal industry is a bank…”

So we can assume that banking stocks, which have already had a very good start to the year, have the potential to shine.

But we know that assumptions can be tricky. Some still believe that credit problems at local banks could put pressure on financial markets.

“U.S. community banks face a tougher path to growing profits in 2024 as they face pressure to pay depositors more than their larger counterparts while demand from borrowers remains subdued.

“As the interest rate outlook becomes more uncertain, returns for local lenders will also be limited as they are tied up holding money-losing securities on paper instead of making loans or investing in high-yielding assets,” analysts said. — Saeed Azhar, Reuters

With KRE showing strong resistance on the monthly chart, what should we watch for this week?

S&P and Moody’s Investors Service have lowered the credit ratings and revised outlooks of numerous U.S. banks in recent months following a Silicon Valley banking collapse reminiscent of 2008. Both agencies warned that funding risks and falling returns were likely to test the sector’s creditworthiness. .

This is why looking at the KRE chart can be important. Although big banks have prospered since the community bank failures, we know that further stress could be another boost to the economy, the Fed’s interest rate policy, and the stock market.

On the monthly chart, 54.00-55.50 is the key resistance using the 23-month moving average (blue) and 80-month MA (green). This price level also coincides with the ‘crime scene’ in March. Ideally, if KRE can clear resistance, bulls would feel safer in all bank stocks. And we don’t want to see KRE fail at 50.00 once earnings are reported.

I almost gave up our prodigal son (in an economically modern family that is) to die. The coma was probably worse. Nonetheless, we will soon find out, as returns, support, resistance, and six-month timelines are all aligned.

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Tuesday, January 2nd on StockCharts TV final barMish (starting at 22:21) talks about small caps, retail, junk, and why all three will matter in 2024.

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Coming soon:

January 22nd: Your Daily 5Stock Chart TV

January 24: Yahoo! Jae Won

weekly: Business-first AM, CMC market

• S&P 500 (Spy): 480 all-time high, 460 base support.
• Russell 2000 (IWM): 195 core, 180 major support.
• Dow (HE): You should get 370.
• NASDAQ (QQQ): There is major support at 390 with resistance at 408.
• Local Bank (KRE): Support is 47 and resistance is 55.
• Semiconductor (SMH): 170 was cleared and the division was back in the lead.
• Transportation (IYT): You must have 250.
• Biotechnology (IBB): 130 Pivotal support.
• Sleeve (XRT): 70 is now key and pivotal.

Misch Schneider

MarketGauge.com

Director of Trading Research and Education