Investors Pour in to Financial ETFs before Fed’s December Meeting
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. 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 $2.75 billion, KRE is the largest and most heavily traded regional bank ETF in the United States (SPY). Investors are coming to terms with the fact that the Federal Reserve could raise interest rates in its December meeting. KRE, being correlated to rising interest rates, has gained 5.5% in the past month. Shares of KRE have gained 11.4% during the year and have outperformed the overall financial sector.
Moving average analysis
On November 23, KRE closed at $45.27, above its 100-day moving average of $42.69, 50-day moving average of $42.65, and 20-day moving average of $44.44. The chart above shows that KRE crossed its moving averages on October 26 and has been trending upward since then.
The 14-day Relative Strength Index (or RSI) for the KRE ETF is 59.3 as of November 20. The RSI for the KRE ETF has improved from 38.25 on September 4, 2015, when global stock markets plunged following the devaluation of the yuan.
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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