Banking Index

A look at the banking index from Chart of the Day.

Here's what they say:

For some perspective into the all-important banking sector, today's chart presents the current trend of the KBW Bank Index. As today's chart illustrates, banking stocks peaked back in early 2007. The impact of an already weakening real estate market began to take its toll and banking stocks began to trend lower at an ever-increasing rate. This weak banking sector performance ultimately preceded the recent financial crisis. Following a post-financial crisis rally into early 2010, banking stocks have traded in a fairly flat/choppy manner (though with a slight downward bias -- see red resistance line). Since late 2011, however, the trend has been up (see green line). With banking stocks having recently pulled back from resistance and currently testing support, this all-important sector is fast approaching a critical decision point.

My comment:  Banks seem to be back from the dead as they have for the most part restructured away their past sins.  Banks should continue to improve as the economy improves but are unlikely to recover the multiples they enjoyed prior to the real estate crisis began in 2007.  Regulation and distrust of the group as a whole will likely keep a lid on what investors are willing to pay for these names.  Plus, they pay nothing like the dividends they once did.

*Long ETFs related to the KBW Bank Index in client accounts, long certain other banking and financial indices in client accounts and personal accounts.  Certain clients own some individual bank stocks as legacy positions.