Deutsche Bank dominated the news late in the week, but US banks have been largely unaffected and bullish flags are taking shape in two bank-related ETFs. The charts below show the Bank SPDR (KBE) and the Regional Bank SPDR (KRE) in long-term uptrends. Notice that the 50-day EMAs are above the 200-day EMAs and both ETFs hit their highest levels of the year in late August. Both ETFs pulled back in September, but I view short-term pullbacks as opportunities when the bigger trend is up.
The ETFs pulled back after the August surge and these pullbacks look like bull flags. Note that bullish flags slope down and mark corrections within an uptrend. A move above the late September highs would break flag resistance and signal an end to the correction. This would also signal a resumption of the bigger uptrend. Chartists can also watch the Percentage Price Oscillators (PPOs) because they are flattening and could be poised for an upturn.
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Thanks for tuning in and have a good weekend!
--Arthur Hill CMT
Plan your Trade and Trade your Plan
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