Local Anesthesia for Regionals

As a few of our Members observed this morning, it looks as though the regional banks are numbing to recent pains with some local (or, well, regional) anesthesia in the form of a sharp relief rally in the debt-ridden energy firms (to which quite a few regionals have exposure), as well as the inter-related HYG JNK ETFs. 

Furthermore, when you see the likes of CHK rallying sharply and confirming an inverse head and shoulders daily chart bottom, it just reinforces the harsh but true history that the sad, untimely death of former CHK CEO Aubrey McClendon tends to be the type of brutal event you see close to bottoms than tops, or in the meat of a trend. 

Again, all of this gives regional banks a reprieve here, as we work towards their earnings. It would not surprise me to see KRE, the regional bank ETF below on the daily timeframe, now test its 200-day moving average (yellow line), or at least come close to it if they can hold this $38.80 level here. 

Above all else, this type of action should drive home how correlated some of the higher risk energy names and regional banks are in this cycle.