The SPDR S&P Regional Banking ETF (KRE) fell off a cliff in recent days -- a very dramatic move lower on the heels of the SVB "affair" ( (SIVB) , (SBNY) ).
Let's see if the charts give us any guideposts to work with.
In the daily bar chart of the KRE, below, I can see that share prices had moved sideways for most of the past 12 months but then turned lower in early February and continued to decline sharply into the middle of March. The shares got no support or buying interest from the 50-day and the 200-day moving averages. KRE is trading below both lagging indicators and the slopes of these two averages are turning negative.
Trading volume has surged sharply as traders and investors rushed to liquidate long positions. The daily On-Balance-Volume (OBV) line has made a new low for the move down, telling observers that sellers are very aggressive. The Moving Average Convergence Divergence (MACD) oscillator is in a bearish alignment below the zero line.
In the weekly Japanese candlestick chart of the KRE, below, I see a bearish picture. Prices have broken down from a large top formation that stretches back to early 2021. KRE trades below the declining 40-week moving average line.
Trading volume surged on the decline. The weekly OBV line made a new low for the move down from early 2022. This suggests the weakness in the KRE has been building for a long time. The MACD oscillator has crossed to the downside from below the zero line for a new outright sell signal.
In this daily Point and Figure chart of the KRE, below, I can see that the chart turned bearish with the trade at $55. Now the software projects a price target in the $19 area. Ouch.
In this second Point and Figure chart of the KRE, below, I used weekly price data, which gives us the same $19 price objective as the daily chart above.
Bottom-line strategy: There is an old saying on Wall Street that you should never try to catch a falling knife. The charts of the KRE look like a falling knife. The shares could bounce but I will keep my kitchen knives out of reach by children, traders and others.
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