The banking sector has certainly been a laggard of late. Just yesterday the BKX (KBW Band Sector Index) was trading near its lows for the year. Bank of New York (BK) on the other hand has held up extremely well. As June begins, the stock is working on its third-straight higher monthly low and as its narrow consolidation produces more positive signs. BK investors should keep a close eye on the stock in the near term. A clear breakout from this pattern could carry shares sharply higher.
Back in early December, BK left behind an ominous spike high as the powerful post-election run hit a wall. After gaining over 25% from the October lows, the stock was in need of a pullback. After a slight bump in early January, BK began the process. Since then, the stock has been moving sideways while remaining inside the January range. That type of a narrowing pattern could give way to a big move. The odds are beginning to favor an upside resolution.
In the near-term, investors should consider BK a fairly low risk-buy near current levels. A key upside hurdle for the stock will be the April high near $48.00. Once that level is clearly taken out, there should be enough momentum in place to drive share past the 2016 high of $49.55. On the downside, the risk is very well defined. A close back below $46.00 would violate the May low indicating more consolidation is ahead.View Chart in a New Window