Are Bank Stocks About To Head South?

The bank stocks may be in trouble.

The SPDR S&P Bank ETF KBE tracks the banking sector and now it’s testing an important resistance level. If it can’t break through, there’s a chance it rolls over and forms a new downtrend.

Resistance is a large group of sellers all trying to get the same price for their shares. In this case, it’s $50.

There’s a reason the sellers have gathered at this level. Many of them bought the stock at $50 when it was support.

Once KBE traded below it, many of these investors have buyer’s remorse and decide to sell. As a result, they place their sell orders at $50 so they can get out without losing money.

If these sellers keep a top on the stock for a few days, there’s a good chance other sellers come into the market. This could cause a new downtrend to form.