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Goldman Sachs Belatedly Realizes Regional Banks Gaining Relative Strength

|Includes: ACWI, SPDR S&P Regional Banking ETF (KRE)

From WSJ MarketBeat Blog, Jan 28:  "Goldman Sachs upgrades regional banking sector view to neutral from cautious, contending credit problems, earnings and capital risk are all looking better."

From my Instablog, Jan 21: "KRE, the regional bank etf, has shown noticeable relative strength since mid-Dec, including the past two days.  While the market focuses on the Goldman's of the world, and Obama's attack on them, this significant improvement in relative strength of the banks that actually help finance the real economy, rather than exist for the speculative benefit of their partners, is a positive for both the market and the economy."

Below is the same chart, updated, that I showed in my Jan 21 instablog of the sharp increase in relative strength of KRE, using ACWI, MSCI All Country World Index etf as the base.

Sometimes technicals do lead fundamentals.  Many Wall Street analysts often try to chase charts, whether they will admit to it or not.  Unfortunately they still often lag the market both on the way up and on the way down.  The latter is especially well known, much to the chagrin of many oft-burned investors, perhaps most egregiously when the tech bubble collapsed in 2000, and the credit bubble collapsed in 2008.

Left click on chart to enlarge.