Mish’s Daily: Should the market worry about the regional banking sector?

KRE Regional Banks is a member of my Economic Modern Family. Taking bank earnings into account, this ETF measures the smaller banks — the ones that people living in more rural communities and smaller towns often go to to borrow and save.

Here is a passage from March 22, 2022:

“We have and are using Mish’s Economic Modern Family to successfully navigate the pandemic, and now, in 2022, we are using their insights to guide us through a year that presents three main stresses: geopolitical stress from the current Russia Ukraine war, inflation and finally rising interest rates.”

I quote this passage because just a week later the S&P 500 peaked. And we all know what happened from there.

So here we are in 2023 and the enthusiasm for a floor remains high. Calls for a Fed pivot are unrelenting. However, as of March 22, 2022, the war between Russia and Ukraine is ongoing, inflation (although it has cooled in some areas) is accelerating and interest rates are rising…well, the Fed hasn’t said anything about a turnaround.

By the way, deJa’Vu again, the US has a debt ceiling emergency in the middle.

I remember 2011. The political struggle to delay the inevitable – raise the cap and print more money. By the time everyone was playing nice, the market was down 20%. So I’m wondering, is that why KRE is limping and living dangerously close to a weekly chart collapse?

First, the 6-month calendar section. KRE’s January high comes in at 61.08 or just below the 50-day moving average. The 6-month low is 57.50, right on the 200-week moving average. We’re loving the calendar range this year because it aligns well with the major moving averages.

So now KRE is roughly in the middle of the range. A move below 57.50 and regardless of what the other members do we will take that as a fair warning. A move above 61.10 and we take that as a good sign and continue to buy. This mid-range swipe can wreak havoc, however, so tread carefully with some patience until the range reconciles.

And remember – it’s always best to look at both the weakest link in the family and the strongest member. KRE is the weakest.

So, we ask, temporary malaise or contagious, with more diseases on the horizon?

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Watch Mish on CNBC Asia tonight and tomorrow Make money with Charles Payne!

In Stock Charts TV Charting Forward 2023Mish sits down with a panel of experts to have an open discussion about what they see and hear about in the markets.

Mish presents her outlook for 2023 and gives you 6 trading ideas from macro to micro in Thursday 12th January Stock Charts TV Your Daily Five.

Mish and John discuss how stocks and commodities can come together to a point this appearance on Bloomberg BNN.

Mish and the team discuss their prospects and why inflation will persist, with a focus on gold this appearance on Benzinga.

As the weekly charts continue to speak of a bear market rally, Mish and presenter Dave Keller discuss the promise of the daily charts the Tuesday, January 10 issue of The last bar (full video here).

In this appearance on Business First AM, Misch discusses global inflation concerns.

• S&P 500 (SPY): Day 1 of January calendar range reset; SPY fails at 200 and 50-DMA.
• Russell 2000 (IWM): In better shape than SPY but still a nasty reversal and needs to hold 180.
• Dow (DIA): Back below the 50-DMA as industrials lose ground.
• Nasdaq (QQQ): Sitting just below the 50-DMA and never cracking the 200-WMA.
• Regional Banks (KRE): Led the way down and now needs to hold 57.50.
• Semiconductor (SMH): We’ll see that he still holds key support at the 50-WMA.
• Transport (IYT): 225 key support here.
• Biotechnology (IBB): Still best sector with 132 key support.
• Retail (XRT): 63 of the 200-WMA if the market needs to hold up well.

Misch Schneider

MarketGauge.com

Director of Trade Research and Education