KRE Breakout Holds and Bodes well for Small-caps

The Regional Bank ETF pattern over the last few months is similar to that of the S&P SmallCap 600 SPDR and Russell 2000 ETF. This is not surprising because the financial services sector accounts for 17.8% of IJR and 16.34% of IWM, and is the second biggest sector for both. I wrote about IJR on April 25th and it continues to hold its breakout. Today we will look at a similar breakout in KRE.

The chart below shows the Regional Bank ETF (KRE) with a major breakout in late October and early November. The ETF raced higher with a big move into March with three small bullish continuation patterns along the way. The ETF then formed a triangle from mid March to late April and represents a rest within the bigger uptrend. As another bullish continuation pattern, the recent breakout signals an end to this rest and a continuation of the uptrend. The blue shading marks the breakout zone and the first area to watch for a failure.  

Chartists trading this breakout or other breakouts can consider the ATR Trailing Stop on StockCharts ACP. This stop is set when the breakout occurs (signal) and trails price by two ATR(22) values. It is 2 ATR(22) values below the highest close since the breakout. A close below this stop (67.40) would call for a re-evaluation. The ATR Trailing Stop is part of the TIP Indicator Edge Plugin for StockCharts ACP (click here).

There is a lot of chatter on seasonal patterns and the worst six months. This week at TrendInvestorPro, I quantified performance for the best and worst six months over the last 25 years with hard data and equity curves. I also quantified performance for each month in a similar fashion. Click here to subscribe and see what seasonality says for May, June and July.