Bank stocks have been in a recovery trend since hitting key lows following the regional banking crisis in 2023. Some stocks have fully come back (like JPMorgan), but most remain in the red. far from the highest level of the past few years. According to the charts, a new breakout could be imminent. Let’s break it down. Two of the most popular banking ETFs are SPDR S&P Regional Banking ETF (KRE) and SPDR S&P Bank ETF (KBE). Although their graphs are similar, they are not the same, which we will look at in detail below. On the surface, ETFs share some common characteristics but also differ in many other ways. This table compares two ETFs. The blue highlighted cells depict which ETFs have the edge in that particular category. Aside from both parent banks, here are the main similarities: Both own a lot of stock. Even though they don’t diversify the markets they represent, none of their holdings have too much influence. Both are up significantly from 2023 lows. Believe it or not, KRE (+44%) and KBE (+51%) both outperformed the S&P 500 (+38%) from season lows corresponding spring. Both lag the S&P 500 in 2024, which is +8.2% YTD. The notable differences are as follows: KRE is much more liquid. According to ETFDB.com, its average daily volume is nearly 14 million shares compared to KBE’s 2.5 million. The biggest difference is that KRE only holds regional banks. KBE holds both major and regional money center banks (along with a number of banks from financial services and capital markets). Thus, the average market capitalization of KBE is nearly 8 times larger than KRE. KBE owns the largest bank – JPMorgan, which has a market capitalization of half a trillion dollars. These factors are all important because each investor has different needs. Bullish Charts Now that we understand what’s behind both ETFs, let’s talk about the charts. The bottom line is that both KRE and KBE are forming bullish patterns and we could see breakout attempts soon. As noted above, the charts are not identical but they do share one key characteristic. Both KBE and KRE are consolidating their rising 200-day moving averages. KBE is testing late 2023 highs and is close to breaking out of a six-month cup/handle base. The initial target will be 52 USD. KRE remains clearly below its December 23 peak, but it is close to breaking out of its own bullish pattern. It is small and the trading target is only slightly above the stated December 23 peak but achieving any upside target is constructive. It simply keeps the back story alive. Zooming out over a three-year period, we see exactly how the overall comeback of the banks has played out. While it’s been a tumultuous ride, both KBE and KRE have continued to hit higher lows since last spring. KBE breached two-year downtrend line; KRE is currently retesting its downtrend line. Of course, interest rates play a big role. Here is a chart with the 10-year yield, KBE and KRE. It’s clear that both bank ETFs have essentially done what most equity ETFs have done since late 2021 – rebounded after hitting key lows in fall ’22, spring of ’23 and again in fall of ’23. For most of that time, rates have increased. Whether this will help the banks perform better in the long run remains to be seen, but for now, their charts suggest their comeback story continues. -Frank Cappelleri Founder: https://cappthesis.com DISCLOSURE: (Owned by JPMorgan.) THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT RELATE TO FINANCIAL, INVESTMENT, TAX OR LEGAL OR A RECOMMENDATION TO PURCHASE ANY SECURITIES OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL AND DOES NOT RESPONSE TO ANY INDIVIDUAL’S UNIQUE CIRCUMSTANCES. THE ABOVE CONTENT MAY NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISION, YOU SHOULD CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for full disclaimer.