{"id":191814,"date":"2023-06-10T17:38:50","date_gmt":"2023-06-10T21:38:50","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=191814"},"modified":"2024-01-24T12:13:30","modified_gmt":"2024-01-24T17:13:30","slug":"chart-advisor-banks-bounce-back-2","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/chart-advisor-banks-bounce-back-2\/","title":{"rendered":"Chart Advisor: Banks Bounce Back"},"content":{"rendered":"\n<p><strong><a href=\"https:\/\/www.investopedia.com\/contributors\/54841\/?utm_source=chart-advisor&amp;utm_campaign=fwd_chartadvisor&amp;utm_term=27774019&amp;utm_medium=email\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>By&nbsp;<\/strong><\/a><strong><a href=\"https:\/\/www.investopedia.com\/contributors\/54841\/?utm_source=chart-advisor&amp;utm_campaign=fwd_chartadvisor&amp;utm_term=27774019&amp;utm_medium=email\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>J.C. Parets<\/strong><\/a>&nbsp;&amp;&nbsp;<a href=\"https:\/\/get.allstarcharts.com\/?utm_source=chart-advisor&amp;utm_campaign=fwd_chartadvisor&amp;utm_term=27774019&amp;utm_medium=email\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>All Star Charts<\/strong><\/a><\/strong><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-wednesday-7th-june-2023\">Wednesday, 7th June, 2023<\/h2>\n\n\n\n<p><strong>1\/ Banks Bounce Back<\/strong><\/p>\n\n\n\n<p><strong>2\/ A Logical Level for New Leadership<\/strong><\/p>\n\n\n\n<p><strong>3\/ Vietnam Builds a Base<\/strong><\/p>\n\n\n\n<p><strong>4\/ Investors Prefer Emerging Market Bonds<\/strong><\/p>\n\n\n\n<p><em>Investopedia is partnering with All Star Charts on this newsletter, which both sells its research to investors, and may trade or hold positions in securities mentioned herein. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-1-banks-bounce-back\">1\/ <strong>Banks Bounce Back<\/strong><\/h2>\n\n\n\n<p>After slicing to its lowest level since September 2020, the Regional Banks ETF (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=kre&amp;hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">KRE<\/a>) quickly recovered and has rallied roughly 9% in the past two days.<\/p>\n\n\n\n<p>Not only are these stocks an excellent indicator to measure risk appetite, but banks represent the most significant industry weighting in&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/s\/small-cap.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">small-cap<\/a>&nbsp;equity indexes.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/06\/1-7-1100x546.png\" alt=\"\" class=\"wp-image-191815 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/546;\" \/><\/figure>\n\n\n\n<p>As you can see, KRE is reclaiming a critical level of former&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/s\/support.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">support<\/a>&nbsp;at the $41.30 level. Additionally,&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/m\/momentum.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">momentum<\/a>&nbsp;is accelerating higher, reaching its highest level in four months.<\/p>\n\n\n\n<p>As long as this economically sensitive group remains above this support level, it is likely that a tradable low is in. This is also a positive sign for the overall market, as it supports the&nbsp;<a href=\"https:\/\/www.investopedia.com\/articles\/trading\/05\/020305.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">sector rotation<\/a>&nbsp;taking place since last week.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-2-a-logical-level-for-new-leadership\">2\/ <strong>A Logical Level for New Leadership<\/strong><\/h2>\n\n\n\n<p>We&#8217;ve been alerting investors to what looks like the early stages of a significant rotation out of&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/l\/large-cap.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">big-cap<\/a>&nbsp;tech and into small-cap stocks.<\/p>\n\n\n\n<p>One way to visualize this theme is through the ratio between the iShares Core S&amp;P Small-Cap ETF (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=ijr\" target=\"_blank\" rel=\"noreferrer noopener\">IJR<\/a>) and Large-Cap Technology Sector ETF (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=xlk&amp;hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">XLK<\/a>):<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/06\/2-6-1100x546.png\" alt=\"\" class=\"wp-image-191816 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/546;\" \/><\/figure>\n\n\n\n<p>The ratio violated a critical support level and reached multi-year lows last week. However, buyers immediately stepped in and are trying to reclaim this former support at the 2020 low. This potential&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/f\/failedbreak.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">failed breakdown<\/a>&nbsp;could result in a fast move in the opposite direction over the coming weeks.<\/p>\n\n\n\n<p>There&#8217;s also a bullish momentum divergence in place as the 14-day&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/r\/rsi.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">relative strength index (RSI)<\/a>&nbsp;made a higher low despite the lower lows in price.<\/p>\n\n\n\n<p>If IJR\/XLK reclaims 0.60, it will be a major data point that supports a healthy rotation into the smaller names and value-oriented areas of the market.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-3-vietnam-builds-a-base\">3\/ <strong>Vietnam Builds a Base<\/strong><\/h2>\n\n\n\n<p>It\u2019s difficult to maintain a bearish outlook for global equities when the riskiest areas of the world are breaking out. We\u2019re talking about&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/e\/emergingmarketeconomy.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">emerging<\/a>&nbsp;and&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/f\/frontier-market.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">frontier markets<\/a>.<\/p>\n\n\n\n<p>The Vietnam ETF (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=vnm&amp;hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">VNM<\/a>) provides an excellent example of this theme:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/06\/3-6-1100x546.png\" alt=\"\" class=\"wp-image-191817 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/546;\" \/><\/figure>\n\n\n\n<p>VNM is printing fresh eight-month highs as it completes a bearish-to-bullish&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/r\/reversal.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">reversal<\/a>. It\u2019s also registering the highest 14-day relative strength index (RSI) reading since 2020, indicating that the bulls are in control and confirming today\u2019s breakout.<\/p>\n\n\n\n<p>Seeing a frontier market country like Vietnam post a major pattern reversal underlines global risk appetite\u2014the type of behavior befitting a bull market.<\/p>\n\n\n\n<p>We imagine that, if VNM holds its breakout, other U.S. and international equity&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/i\/index.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">indexes<\/a>&nbsp;could follow as stock market bears continue to lose ground.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-4-investors-prefer-emerging-market-bonds\">4\/ <strong>Investors Prefer Emerging Market Bonds<\/strong><\/h2>\n\n\n\n<p>International&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/c\/creditspread.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">credit spreads<\/a>&nbsp;are contracting.<\/p>\n\n\n\n<p>If investors prefer emerging market bonds over risk-free&nbsp;<a href=\"https:\/\/www.investopedia.com\/articles\/investing\/073113\/introduction-treasury-securities.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">U.S. Treasuries<\/a>, global equity markets must be healthy. That includes the S&amp;P 500 and domestic equities.<\/p>\n\n\n\n<p>Check out the Emerging Bond ETF (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=emb&amp;hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">EMB<\/a>) vs. the U.S. Treasuries ETF (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=ief&amp;hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">IEF<\/a>) ratio overlaid with the S&amp;P 500 ETF (<a href=\"https:\/\/www.investopedia.com\/markets\/quote?tvwidgetsymbol=spy&amp;hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">SPY<\/a>):<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/06\/4-5-1100x561.png\" alt=\"\" class=\"wp-image-191818 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/561;\" \/><\/figure>\n\n\n\n<p>We use the EMB\/IEF ratio to measure international credit spreads. The outperformance of EMB since early April highlights a risk-seeking behavior associated with&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/b\/bullmarket.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">bull markets<\/a>. So it isn\u2019t surprising SPY is challenging its August 2022 highs.&nbsp;<\/p>\n\n\n\n<p>We could witness those former highs falling to the wayside if participation broadens into small caps and&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/v\/valuestock.asp?hid=aa5e4598e1d4db2992003957762d3fdd7abefec8&amp;did=9355095-20230607&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=060723\" target=\"_blank\" rel=\"noreferrer noopener\">value-oriented stocks<\/a>. It appears that international equities are leaning in that direction\u2014up and to the left. And so are emerging market bonds.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally posted 7th June 2023<\/p>\n","protected":false},"excerpt":{"rendered":"<p>After slicing to its lowest level since September 2020, the Regional Banks ETF (KRE) quickly recovered and has rallied roughly 9% in the past two days.<\/p>\n","protected":false},"author":186,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[14,15,18,9,22,23,26,3],"tags":[6917,8122,8009,2175,445,262,15421,1302],"contributors-categories":[13686],"class_list":{"0":"post-191814","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-etfs","7":"category-fixed-income","8":"category-macro","9":"category-securities","10":"category-stocks","11":"category-technical-analysis","12":"category-text-articles","13":"category-traders-insight","14":"tag-emb","15":"tag-ief","16":"tag-ijr","17":"tag-kre","18":"tag-rsi","19":"tag-spy","20":"tag-vnm","21":"tag-xlk","22":"contributors-categories-investopedia"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Chart Advisor: Banks Bounce Back | Traders&#039; Insight<\/title>\n<meta name=\"description\" content=\"After slicing to its lowest level since September 2020, the Regional Banks ETF (KRE) quickly recovered and has rallied roughly 9% in the past two days.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.interactivebrokers.com\/campus\/wp-json\/wp\/v2\/posts\/191814\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Chart Advisor: Banks Bounce Back | IBKR Campus US\" \/>\n<meta property=\"og:description\" content=\"After slicing to its lowest level since September 2020, the Regional Banks ETF (KRE) quickly recovered and has rallied roughly 9% in the past two days.\" \/>\n<meta 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