ZChartDoc

Ugly Chart and Bad Fundies for Banks

Short
AMEX:KRE   SPDR SERIES TRUST S&P REGIONAL BKG ETF
Expecting something like this to play out with KRE (regional banks). So many headwinds for banks going forward, even if we avoid any further Corona problems (big if), we are expected to be in a zero or negative rate environment for years to come. Just look at what happened to Japanese and European banks under those conditions for long timeframes. It's not pretty.

Plenty of room to the downside after breaking through the primary wedge support line. Next stop looks like $33 area. Would expect some sort of bounce there before resuming downtrend to test the march lows.

Position:
12/18/20 25p

Would reassess if genuine reflation and growth begins in the economy. Long duration on the option so even if next move in stocks is upwards I plan to diamond hands these.

Comments

We hit some resistance around $42 and dropped today. Could it be the top of right Shoulder and we are heading down to $38 by the end of the month?
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MASKMAN naserhalteh
@naserhalteh, Good call! Where from here? Will support hold or will we go back to trading between 35.5 and 38.5?
+1 Reply
naserhalteh naserhalteh
Thanks @maskman. Volume for KRE is low and downwards. It’s not over sold yet. I think KRE goes lower...don’t know where though yet.
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We just hit $38 on $KRE. Is that your right shoulder target?
Reply
ZChartDoc naserhalteh
@naserhalteh, Yes I'm looking for a reversal around this level if the formation is to play out. Hopefully doesn't carry much higher. But could hang around these levels for some days/weeks based on the chart, before heading to the downside.
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