S&P Bank ETF Just Erased 18 Months of Gains

Wall Street’s most notorious financial engineers aren’t getting any love from investors lately.

The SPDR S&P Bank ETF (NYSEArca: KBE) just slipped to the lower end of an 18-month trading range, again.

My December 29 article pointed out that KBE is traded at key resistance around 34 and warned that: “KBE is at an inflection point. Could KBE become the (sector) tail that wags the (broad market) dog?”

KBE is close to support around 31, but a break to at least 29.5 becomes likely if that fails.

Perhaps more intriguing is the long-term correlation between KBE and its cousin the Financial Select Sector SPDR (NYSEArca: XLF).

KBE’s recent reversal below its high kept a divergence alive that proved bearish in 2007. More details here: Bearish Financial Sector Divergence Stokes 2007 Crash Memory (don’t allow the bearish title to scare you … at least not yet).

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

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