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Banks Are Showing Signs of Life

|Includes:KBE, RKH, Financial Select Sector SPDR ETF (XLF)

The Banking sector, which has been lagging for months now (I've previously commented on its underperforming range) has shown some interesting signs of strength thus far in 2010.  Take a look at the chart of the PHLX Bank Index (BKX) (NYSEARCA:KBE) (NYSEARCA:RKH) (NYSEARCA:XLF) below:

BKX Daily Chart

You can see that the recent move higher has sprung Percent R and Efficiency Ratio to levels not seen in some time.  Additionally, the slope of their upward spikes is impressive.

Bank sector should be considered for a momentum upside play ... longer-term fundamentals remain iffy, in my view.  Additionally, keep in mind that Percent R has not yet broken 80 on the BKX Daily Chart, which is a key bullish threshhold in our analysis.  Also, we are right at the Top Acceleration Band (purple lines), which is also a key technical area.

Moby Waller,

Disclosure: No positions.
Stocks: XLF, KBE, RKH