Investors Pour in to Financial ETFs before Fed’s December Meeting
Overview of KBE
The SPDR S&P Bank ETF (KBE) seeks to track the returns on the S&P Banks Select Industry Index. It had a market capitalization of $3 billion as of November 24 and on an average, 1.2 million shares trade hands every day. The fund invests in a portfolio of publicly traded money centers and leading regional banks. Approximately 80% of its holdings are concentrated in regional banks.
KBE’s largest holdings are Bank of the Ozarks (OZRK), Western Alliance Bancorporation (WAL), Cullen/Frost Bankers (CFR), First Niagara Financial Group (FNF), and Fulton Financial Corp (FULT). These have weights of 1.9%, 1.9%, 1.8%, 1.8%, and 1.8%, respectively, in the KBE ETF.
Moving average analysis
On November 23, 2015, KBE closed at $36.17, above its 100-day, 50-day, and 20-day moving averages of $34.81, $34.39, and $35.67, respectively. The chart above shows that KBE has crossed over its 20-day moving average on November 13, 2015. It currently trades above all its moving averages.
The chart also shows that the 50-day moving average and 100-day moving average for KBE are approaching each other and a crossover is possible. Technical analysts view this as a bullish signal.
The 14-day Relative Strength Index (or RSI) for the KBE ETF is 59.5 as of November 20. The RSI for KBE has improved from 36.5 on September 4. This suggests that the ETF is nearing overbought levels and may be considered overvalued. An RSI figure below 30 is an indication of an oversold stock while an RSI above 70 denotes an overbought stock.
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