Overview of KRE
The SPDR S&P Regional Banking ETF (KRE) seeks to track the performance of the S&P Regional Banks Select Industry Index. This ETF particularly targets regional banks in the United States (SPY). Its top holdings are Bank of the Ozarks (OZRK), Western Alliance Bancorporation (WAL), BBCN Bancorp, Home BancShares (HOMB), and Simmons First National Corporation Class A.
With assets under management of $1.7 billion, KRE is the largest and most heavily traded regional bank ETF in the United States. Shares of KRE have fallen 11% in 2016 so far due to fears of a global slowdown, plunging commodity prices, and falling expectations of a rate hike.
However, in the last month, worries of a global recession have eased, and financial markets have recovered. KRE has risen 5.1% in the past month.
Moving average analysis
On March 24, 2016, KRE closed at $37.76, below its 100-day moving average of $39.76, above its 50-day moving average of $36.3, and above its 20-day moving average of $37.65. The chart above shows that KRE crossed above its 50-day moving average on March 2.
The 14-day relative strength index (or RSI) for KRE is 53 as of March 24, 2016.[1. An RSI figure of below 30 is an indication of an oversold stock, while an RSI of above 70 denotes an overbought stock.]
ETFs in the financial space have been clobbered by fears of a recession since the beginning of the year. Further, the first-quarter trading revenues of banks are expected to be hit by weak stock markets, and a low-interest-rate outlook further worsens their case.
The sector has seen some respite in the past few weeks as signs of an improving US economy have eased fears of a recession. Comments from the Federal Reserve on future rate hikes and an improving US economy have pacified investors. Read on to understand how fund flows to KRE have been in 2016.