Mish's Market Minute

Regional Banks - The Prodigal Dunce


With the Russell 2000 breaking out over the 50 and 200-week moving averages, the market looks like blue skies, right?

Retail (XRT) ran to just over $50.00. Sister Semiconductors (SMH) rocked to another new all-time high. Transportation (IYT) passed the critical test at the 200-WMA. Biotechnology (IBB) consolidated over the 5-year breakout.

But our Prodigal Son Regional Banks? Well... perhaps not all is lost.

Regional Banks (KRE) are in a bearish phase. The sector is having 2 inside weeks. And that makes it easy. A move/hold over 38.70 should be followed for a possible run-up, as shorts are plentiful. It could also mean that the sector believes there will be a stimulus package passed. By contrast, a move/hold below 36.80, regardless of the lofty prices elsewhere, is something I would take as fair warning.

  • S&P 500 (SPY): 325.50 now pivotal support; 332.58 a must-gap to fill
  • Russell 2000 (IWM): 149 key support, took out June 8th highs.
  • Dow (DIA): 270 now pivotal
  • Nasdaq (QQQ): Another low-volume day, so 270 key
  • KRE (Regional Banks): See commentary
  • SMH (Semiconductors): 165-168 pivotal support as it is over an ascending channel
  • IYT (Transportation): 179-180 now key support
  • IBB (Biotechnology): 142 resistance, 136 support
  • XRT (Retail): 50.00 now pivotal
  • Volatility Index (VXX): Inverted hammer doji - that's a head's up
  • Junk Bonds (JNK): 105.30 key support
  • LQD (iShs iBoxx High-Yield Bonds): 137.75 support to hold

Mish Schneider


Director of Trading Research and Education

Mish Schneider
About the author: serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision. Learn More
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