Are Bank Stocks About To Head South?
The bank stocks may be in trouble. The SPDR S&P Bank ETF (NYSE: KBE) tracks the banking sector and now its testing an important resistance level. If it cant break through, theres a chance it rolls over and forms a new downtrend. Resistance is a large group of sellers all trying to get the same price for their shares. In this case, its $50. Theres a reason the sellers have gathered at this level. Many of them bought the stock at $50 when it was support. Once KBE traded below it, many of these investors have buyers remorse and decide to sell. As a result, they place their sell orders at $50 so they can get out without losing money. If these sellers keep a top on the stock for a few days, theres a good chance other sellers come into the market. This could cause a new downtrend to form.