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KBE Is Trading below Its Historical Moving Averages In 2016

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Overview of KBE

The SPDR S&P Bank ETF (KBE) seeks to track the returns of the S&P Banks Select Industry Index. It has a market capitalization of $2.1 billion and a trading volume of $4.3 million in shares as of February 26, 2016.

KBE invests in a portfolio of publicly traded money centers and leading regional banks. Approximately 80% of its holdings are concentrated in regional banks. Its largest holdings are Bank of the Ozarks (OZRK), Western Alliance Bancorporation (WAL), Cullen/Frost Bankers (CFR), First Niagara Financial Group (FNF), and Fulton Financial (FULT). These stocks have weights of 1.9%, 1.9%, 1.8%, 1.8%, and 1.8%, respectively, in KBE.  

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Moving average analysis

On February 26, KBE closed at $28.97, below its 100-day and 50-day moving averages of $32.69 and $30.37, respectively, but higher than its 20-day moving average of $28.36. The chart above shows that KBE crossed above its 20-day moving average on February 23. Technical analysts view this as a trend reversal signal.

RSI

The 14-day relative strength index (or RSI) for KBE is 50.45 as of February 26. This suggests that the ETF is far from oversold levels but may be considered undervalued. An RSI figure of below 30 is an indication that a stock has been oversold, while an RSI figure of above 70 suggests that a stock has been overbought.

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