Regional banks have similar problems to the four national "too big to fail" money center banks whose shares were crushed on Thursday. Bank stocks will likely recover somewhat on Friday, but that does not remove additional downside risks in the banking industry for the longer term.

The super-regional banks BB&T Corp (BBT) , M&T Bank (MTB) and U.S. Bancorp (USB) ended 2015 below their 200-day simple moving average. PNC Financial (PNC) and SunTrust (STI) ended 2015 above its 200-day simple moving average but gapped below it as the new year began. These stocks are major components of the KBW banking index. All five began 2016 with negative weekly charts providing warnings that downside risks lie ahead. 

On Thursday, investors hit all banks, including the regionals that do not have the overseas exposure of the national banks. Each of the five banks mentioned above set 2016 lows on Thursday, and all but one are in bear market territory.

First, let's look at the weekly chart of the KBW banking index.


Courtesy of MetaStock Xenith

Note that the banking index could not completely recover from the Great Credit Crunch. The horizontal lines shown in the weekly chart are the Fibonacci retracements of the 85% decline from its all-time high of 121.16 set in February 2007 to its March 2009 low of 17.71. The rally from the March 2009 low peaked at 80.87 on July 23 for a gain of 355%. Even so, the index failed below the 61.8% retracement of 81.68.

Put into perspective, the S&P 500  peaked at 2,134.72 on May 20, which is 35.5% above its pre-crash of 2008 high of 1,576.0 set in October 2007. At Thursday's low of 1,810.1 the S&P was still 12.9% above its 2007 high.

After the banking index failed to hold its 50% retracement of 69.46 the downside risk was to the 38.2% retracement of 57.23 and Thursday's close of 56.51 was just below this key level.

The weekly chart is negative but oversold with the index below its 200-week simple moving average of 64.44, which is the upside on a bear market correction. The index is in bear market territory 30.1% below the high. Note that the 200-week simple moving is in green and the momentum reading is in red along the bottom of the chart. 

Here's a scorecard for the five key regional banks, followed by charts for the individual banks.

 

Here's the weekly chart for BB&T Corp.


Courtesy of MetaStock Xenith

The weekly chart for BB&T is negative but oversold with the stock below its key weekly moving average of $33.52 and below its 200-week simple moving average of $35.29. The weekly momentum reading is projected to decline to 18.29 down from 20.88 on Feb. 5 moving below the oversold threshold on 20.00.

Investors looking to buy BB&T should place a good till canceled limit order to buy the stock if it drops to $26.86, which is the low set during the week of Nov. 16, 2012. Investors looking to reduce holdings should enter a good until canceled limit order to sell the stock if it rises to $32.71 and $34.31, which are key levels on technical charts until the end of 2016 and the end of February, respectively.

Here's the weekly chart for M&T Bank Corp.


Courtesy of MetaStock Xenith

The weekly chart for M&T Bank is negative with the stock below its key weekly moving average of $110.03 and below its 200-week simple moving average of $112.32. The weekly momentum reading is projected to decline to 24.26 down from 26.33 on Feb. 5.

Investors looking to buy M&T Bank should place a good till canceled limit order to buy the stock if it drops to $95.68, which is the low set during the week of April 19, 2013. Investors looking to reduce holdings should enter a good until canceled limit order to sell the stock if it rises to $111.89, which is a key level on technical charts until the end of 2016.

Here's the weekly chart for PNC Financial.


Courtesy of MetaStock Xenith

The weekly chart for PNC Financial is negative with the stock below its key weekly moving average of $86.44 and just below its 200-week simple moving average of $78.83. The weekly momentum reading is projected to decline to 27.19 down from 33.52 on Feb. 5.

Investors looking to buy PNC Financial should place a good till canceled limit order to buy the stock if it drops to $76.11, which is a key level on technical charts until the end of 2016. Investors looking to reduce holdings should enter a good until canceled limit order to sell the stock if it rises to $88.43, which is a key level on technical charts until the end of February.

Here's the weekly chart for SunTrust.


Courtesy of MetaStock Xenith

The weekly chart for SunTrust is negative but oversold with the stock below its key weekly moving average of $36.85 and below its 200-week simple moving average of $35.29. The weekly momentum reading is projected to decline to 18.56 down from 21.81 on Feb. 5 moving below the oversold threshold of 20.00.

Investors looking to buy SunTrust should place a good till canceled limit order to buy the stock if it drops to $25.30, which the low set during the week of Nov. 16, 2012. Investors looking to reduce holdings should enter a good until canceled limit order to sell the stock if it rises to $38.86, which is a key level on technical charts until the end of February.

Here's the weekly chart for U.S. Bancorp.


Courtesy of MetaStock Xenith

The weekly chart for U.S. Bancorp is negative with the stock below its key weekly moving average of $40.12 and below its 200-week simple moving average of $38.96. The weekly momentum reading is projected to decline to 28.06 down from 30.64 on Feb. 5.

Investors looking to buy U.S. Bancorp should place a good till canceled limit order to buy the stock if it drops to $35.85, which is a key level on technical charts until the end of 2016. Investors looking to reduce holdings should enter a good until canceled limit order to sell the stock if it rises to $41.52, which is a key level on technical charts until the end of February.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.