Regional Banks BB&T, M&T, PNC, SunTrust, U.S. Bancorp Holding Key Levels Pre-Earnings

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Includes: BBT, MTB, PNC, STI, USB
by: Richard Suttmeier

Summary

Here are 5 super regional banks that have negative weekly charts but are holding key levels on their daily charts.

These banks report second-quarter earnings between July 13 and July 20 and were upgraded following passage of Fed stress tests.

BB&T Bank and SunTrust have year-to-date gains, but are 9.2% and 8.2% below their March 12 highs, respectively.

M&T Bank, PNC Financial and U.S. Bancorp are in correction territory below highs set in January or February.

Passing the Fed stress tests and favorable tax treatment is a setup that should help big banks beat second-quarter earnings estimates, but balance sheet issues remain.

Now that the biggest banks can increase dividends and initiate larger share buyback programs, some Wall Street analysts have upgraded the financial sector ahead of upcoming earnings. This is a tough call as I have been writing cautious comments since these stocks peaked between January 29 and March 12.

Here's the Scorecard for the Five Super Regional Banks I have been covering.

Scorecard For The Five Regional Banks

BB&T Corp. (NYSE:BBT) reports second-quarter earnings on July 19, and analysts expect the bank to earn $1.01 a share. The stock has reasonable fundamentals with a P/E ratio of 15.90 and a dividend yield of 2.93%. The weekly chart is negative, and the stock is 9.2% below its 2018 high of $56.31 set on March 12.

M&T Bank (MTB) reports second-quarter earnings on July 18, and analysts expect the bank to earn $3.15 a share. The stock has so-so fundamentals with a P/E ratio of 19.20 and a dividend yield of just 1.89%. The weekly chart is negative but oversold with the stock in correction territory 14.4% below its 2018 high of $197.37 set on Feb. 27.

PNC Financial (PNC) reports second-quarter earnings on July 13, and analysts expect the bank to earn $2.60 a share. The stock has positive fundamentals with a P/E ratio of just 12.51 and a dividend yield of 2.79%. The weekly chart is negative but oversold with the stock in correction territory 16.9% below its 2018 high of $163.58 set on Feb. 27.

SunTrust (STI) reports second-quarter earnings on July 20, and analysts expect the bank to earn $1.29 a share. The stock has reasonable fundamentals with a P/E ratio of 13.86 and a dividend yield of 2.38%. The weekly chart is negative, and the stock is 8.2% below its 2018 high of $73.37 set on March 12.

U.S. Bancorp (USB) reports second-quarter earnings on July 18, and analysts expect the bank to earn $1.00 a share. The stock has reasonable fundamentals with a P/E ratio of 13.72 and a dividend yield of 2.39%. The weekly chart is negative with the stock in correction territory 14.2% below its 2018 high of $58.50 set on Jan. 29.

Other issues provide warnings for bank stocks

  • You cannot have a bull market for stocks with a bear market in the major banks. The daily charts below will show how bank stocks are starting to trend below their 200-day simple moving averages and some "death cross" formations are forming. A "death cross" occurs when the 50-day simple moving average falls below the 200-day simple moving average and is a warning that lower prices lie ahead.
  • The bigger banks have tentacles around the world where there are many problem banks.
  • The FDIC must fund its Deposit Insurance Fund, and as insured deposits continue to grow, so do assessments which are targeted to the larger banks.
  • FDIC data has shown that many banks have been "reaching for yield" by investing higher-risk, longer-term assets. Banks must therefore manage interest rate risk, liquidity risk and credit risk.

Here are the daily charts and the key levels to hold for short-term trading opportunities.

BB&T Corp

Daily Chart For BB&T

Courtesy of MetaStock Xenith

The daily chart for BB&T shows three horizontal lines with the stock below its 200-day simple moving average of $51.45. My annual value level of $50.38 is the middle line that has held several times so far in 2018 providing a level at which to buy on weakness for a trade. Traders can add to positions buying on weakness to my semiannual value level of $48.47 and reduce holdings on strength to my monthly risky level of $54.52.

M&T Bank

Daily Chart For M&T Bank

Courtesy of MetaStock Xenith

The daily chart for MTB shows three horizontal lines with the stock below its 200-day simple moving average of $176.12 as a "death cross" looms. Traders should buy at the lowest horizontal line, which is my second half semiannual pivot at $169.30. Below is the 200-week simple moving average at $139.87. Traders should reduce holdings on strength to my annual pivot of $182.78 and my monthly risky level of $188.69.

PNC Financial

Daily Chart For PNC Financial

Courtesy of MetaStock Xenith

The daily chart for PNC shows three horizontal lines with the stock below its 200-day simple moving average of $145.63 after a "death cross" was confirmed on June 29. Traders should buy at the lowest horizontal line, which is my annual pivot of $135.29. My semiannual pivot is $137.59. Traders should reduce holdings on strength to my monthly risky level at $154.54.

SunTrust

Daily Chart For SunTrust

Courtesy of MetaStock Xenith

The daily chart for SunTrust shows three horizontal lines with the stock above its 200-day simple moving average of $65.81, which held at the low as a buying opportunity at $65.46 on June 27. Traders should buy weakness to my semiannual and annual value levels of $65.95 and $64.41, respectively, and reduce holdings on strength to my monthly risky level of $73.38.

U.S. Bancorp

Daily Chart For US Bancorp

Courtesy of MetaStock Xenith

The daily chart for USB shows two horizontal lines with the stock below a "death cross" since April 11. The stock is below the 50-day and 200-day simple moving averages at $50.73 and $53.02, respectively. Traders should buy weakness to the 200-week simple moving average at $46.93. My monthly pivot is $50.33. Traders should reduce holdings on strength to my semiannual pivot at $51.85.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.