Chart of the Day – July 16, 2020

By: Chris Wenner in Charts 07/16/2020

Regional Banks – using KRE as a proxy – remain down nearly 35% YTD.  They are also lagging the large-cap banks – using XLF – by about 15% this year.  What gives?  Rates are near zero, oil remains well under $50/bl, and lending has tightened up.  Banks, and regional banks in particular, seems to be one of the very few sectors that hasn’t bought into the market comeback and the pricing in of economic stability predicated on a lot of good news.

KRE looks interesting – both technically and fundamentally.  It’s 10-yr Bollinger Band chart has bounced off the lower band.  Previous bounces off the lower band have normally suggested a good risk/reward.  Additionally, many regional banks are trading under 0.80x book value; normally this metric is closer to 1x.

CW

 

By: Chris Wenner

Managing Director

Jonathan Molchan

Wennco's innovative strategies and robust OCIO capabilities are designed for RIAs, Family Offices, and high-net-worth individuals.

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