“In technical analysis, bad trading action on good news is bearish – as is the simple failure of an upside breakout to hold, as we’ve seen with many regional banks. Combined, these two trends do not bode well for the sector,” reports Michael Kahn for Barron’s.
SEE MORE: Financial Sector ETFs Maintain Momentum
For most of this year, bank stocks and ETFs have been responding to speculation about the Fed’s monetary policy.
With a steepening yield curve, or wider spread between short- and long-term Treasuries, banks could experience improved net interest margins or improved profitability as the firms borrow short and lend long.
“Last Thursday, most banks fell in part on fears that slowing growth in China could delay the Federal Reserve’s schedule for interest-rate increases. Both the SPDR S&P Bank exchange-traded fund (KBE) and its SPDR S&P Regional Banking counterpart (KRE) completed technical failure patterns that day by falling sharply just days after moving through resistance to 2016 highs,” according to Barron’s.
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