Yo Pit Crazies,
Why don’t markets move when we want them to?
That’s the biggest issue with short term trading. I think something will happen, and the stock market has another idea entirely.
It’s essential to learn how to deal with mistakes and run a real exit.
SPDR KBW Regional Bank ETF (Ticker: KRE) is not looking like the rest of the market.
Those heady days of 25 basis point rises should have been good for small banks and margins, but things have turned downright ugly.
Let’s dig into this misfit ETF.
There Is A Hint Of Volatility Capitulation In KRE
More bodies get run over when implied vol runs from a low level to a higher level.
KRE fits that bill right now. 90 day implied volatility was in the low 20’s and now is showing signs of life with the near 7% drop in KRE’s stock price.
As of the close on Thursday, IV kept climbing and there was no real end in sight. My only question is if KRE is going to lead the market lower if Main Street banking starts to get drilled.
That is a real threat is a larger set of rate hikes crushes the Main Street consumer.
SVB Financial (Ticker: SIVB) got crushed today over a massive decline in deposits.
I am not sure what the cause was but someone knew something who was selling all the small banks in the KRE.
If it’s a one off event, this could be a fantastic trading opportunity to scoop good banks at great prices.
But I want to see the IV stop going up first.
To Your Trading Success,
AG