Regional Banks Rock (KBE, KRE, RF, STI, IYF)

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Regional banks power higher to lead financial sector to gains

The regional banking sector, represented by SPDR KBW Bank Index (NYSEARCA:KBE)  and SPDR KBW Regional banking (NYSEARCA:KRE) has been on a roll so far in 2012, with the sector up sharply over the last four weeks.  Major player Regions Financials (NYSE:RF) is up 2.8% in late trading today while SunTrust (NYSEARCA:STI) added 1.6%.

The banking sector has become more optimistic in recent weeks as economic reports show improvement in the United States and Europe appears like perhaps it might not fall off a cliff.  Federal Reserve support for the endangered housing industry has added strength to the financial sector (NYSEARCA:IYF)  which has made steady gains since its mid December lows.  After coming off lows set in December, the regional bank ETFs have vaulted through both the 50 day and 200 day moving averages.

Regions Financial (NYSE:RF) rallied hard today on reports that it is going to sell its brokerage arm, Morgan Keenan, most likely to Raymond James or Stifel Financial Corporation.eegan brokerage unit.

Bottom line: Regional banks are hot and point and figure charting points to upside profit objectives approximately 40% higher than current valuations so potential in this sector could be high.

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