Regional Banks Still Look Like Dead Money

As we all know the major stock market indexes found a short term low in early July. Since that time the major indexes have bounced around six to eight percent. Many investors are saying the worst is behind us and the correction that began in April is now over. While the major market indexes have certainly bounced it does seem a little early to wave the all clear sign. The one reason that I say this is due to the poor action in the regional banks. So far in 2010 the FDIC has reported 96 bank failures which are all regional banks. Hudson City Bancorp Inc HCBK reported earnings today and is receiving a poor reaction from traders and investors. The stock is trading lower by 0.30 to $12.40 a share. The daily chart on this stock looks weak and remains under the 20, 50, and 200 moving averages. The stock will still have daily chart support around the $12.00 - $11.75 area. Regions Financial Corp RF is actually trading higher this morning by 0.17 to $6.71. While this stock is trading higher today the daily chart still looks weak. Regions Financial Corp made a low pivot on July 7th at $6.12 and is not that much higher from that level today. The stock is still trading below the important daily 20, 50, and 200 moving averages. As long as early July low holds up the stock may just chop around until it reports earnings on July 27th. SunTrust Banks Inc STI is another regional banks that is trading higher today by 0.01 to $23.08. This stock looks terrible on the charts as it is also trading below the daily 20, 50, and 200 moving averages. The stock found support on July 1st when it traded as low as $21.79. A solid break below that pivot low level the stock should test the $20.00 support area. Suntrust Bank Inc is scheduled to report earnings tomorrow. These are just a few leading regional bank stocks that many traders and investors follow. As you can see these stock all look very poor on the charts. As we all know loan demand is down significantly and unlike the large major banks these banks cannot borrow from the Federal Reserve Bank at zero percent. This disadvantage will certainly weigh on the regional bank stocks. If traders just watch the SPDR KBW Regional Banking ETF KRE you can see that the daily chart looks just as poor as the leading regional stocks. Nicholas Santiago Chief Market Strategist www.InTheMoneyStocks.com