I Want it Done By the Book

The price action in the KRE, ETF for the regional banking sector, below on the daily timeframe, is a pretty good example of the various uses of technical jargon we here nowadays. 

When the KRE staged an apparent post-Labor Day breakdown (lower set of yellow arrows). it appeared to be "Katy bar the door" time for longs, seemingly destined for destruction. 

However, the immediate, sharp upside reversal in price saw many declaring the move to be a "failed breakdown" or "bear trap." As we noted back then, that type of phrasing was too premature, since most breakouts and breakdowns alike tend to make the break, then retest the prior range, then resume the new directional move. 

Hence, if we were to see the regionals confirm that move as a bonafide false breakdown, we needed to see some more strength. 

And, boy, did we.

The regionals zoomed higher throughout September before settling into a fairly benign consolidation, reversing higher after a soft open yesterday, and now gapping up this morning. The main concern now is that a plethora of regional banks will be reporting earnings next week.

However, the likes of the Comerica (CMA) chart, which a Member astutely pointed out to me yesterday, sure gives promise for a new leg higher into the holidays.  

Going forward, if KRE can leave $57.40, then $60 in the dust we look to have a sustained bull run underway in what had been a quiet sector for much of 2017. Again, earnings for the rest of the lot in the next week or two should tip the scales, either way.