Bank Stocks Have Symptoms of QE Fatigue

NEW YORK ( TheStreet) -- The "too big to fail" money center banks and the large regional banks make up the 24 bank stocks in the PHLX KBW Banking Index ( BKX).

The last time I profiled these banks was on Sept. 26 in Don't Bank on Bank Stocks, Just Trade Them and since then the BKX moved up to a potential double top at $52.04 on Oct. 5 vs. its 2012 high of $52.11 on Sept 14.

The sideways-to-down pattern since Oct. 5 has created negative technical divergences on both daily and weekly charts for several members of the BKX and for the BKX as an index. The BKX made significant gains of 52.3% since bottoming in October 2011, and is up 25.9% year to date.

Fundamentally shows the Finance sector 11.3% overvalued.

The weekly chart for the BKX ended last week with declining momentum (12x3x3 weekly slow stochastic) reading of 78.28 down from 81.98 the prior week. This decline under 80 on a scale of 0 to 100 is a negative divergence.

Last Friday's close at 49.25 was just below the five-week modified moving average at 49.50. This is a technical negative and a symptom of "QE Fatigue."

Chart Courtesy of Thomson/Reuters

The daily chart for the BKX (49.60) shows declining momentum with the BKX below its 21-day simple moving average at 50.33, is just above its 50-day SMA at 49.56 and is above its 200-day SMA at 46.76. My quarterly and annual value levels are 47.55 and 42.98 with monthly and weekly risky levels at 51.11 and 53.04.

The above table shows data from covering nine stocks in the BKX.

Reading the Table

OV/UN Valued: The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-Engine" rating is a Strong Sell, a "2-Engine" rating is a Sell, a "3-Engine" rating is a Hold, a "4-Engine" rating is a Buy and a "5-Engine" rating is a Strong Buy.

Last 12-Month Return (%): Stocks with a Red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

If you liked this article you might like

Goldman Sachs Stock Should Rebound in 2016

Reasons to Like U.S. Bancorp and Why Jim Cramer Doesn't

Bank Stocks Year in Review: Where to Deposit Your Cash in 2016

SunTrust Bank Earnings Preview: Why Shares Belong In Your Portfolio

Despite Rising Expenses U.S. Bancorp Remains a Bankable Stock