One of this year’s favored rising rates plays, the SPDR S&P Regional Banking ETF (NYSEArca: KRE), is in the midst of a solid 90-day stretch and that is without the benefit of higher Treasury yields.
In fact, 10-year Treasury yields have stumbled 7.1% over the past 90 days while KRE is up 5.7% over the same period. Regional banks cater toward local retail customers, small- and mid-sized companies. Consequently, there is a certain type of customer concentration in specific markets, but the customer base won’t be the same across multiple regional banks. [Regional Bank ETF Nears New 52-Week High]
KRE, home to $2.4 billion in assets under management, could be poised to deliver further near-term upside as the fund has recently been consolidating in a tight range in the high $37 to $38.50 area.
Deron Wagner of Morpheus Trading Group notes KRE may be in the early stage of forming what is known as a base on base chart pattern.
To stoke fresh buying KRE, likely needs to clear $39 on strong volume. The base on base pattern is noteworthy because “KRE climbed 27% after clearing a cup-with-handle base in January, consolidating a couple of times on its way to a high 37.72 in August. It’s since formed a flat base, “ reports Doug Rogers for Investor’s Business Daily.