Commentary

KRE

Weekly

Friday turned an unconvincing looking week into something nice. The last two weeks has been dedicated to a spirited discussion over which side of the 13 week moving average KRE’s current price belongs on.

The thrust above the 13 week when the 52 week is above the action is quite bullish.

A buy signal was given by the candle closing green. This was also confirmed by a buy signal on the PPO histogram (green bar).

Daily

The advance today cleared the 54 day moving average, a significant achievement. The consolidation period was an 8 day stay in the area between the rising 54 day and falling 18 day moving averages. This setup strikes me as quite bullish.

March 18 Action

Note that a buyer of the green candle produced on March 18 would have had a bad day on March 19, plus it is not easy to sell at the close there. Sometimes bad things happen to nice people.

The algorithm would have bought at the close of March 18 for 55.61 and sold at the close of March 19 for 54.22. It would then have gone long at the close of April 1 at 52.83 on the green candle. That was well played by the algorithm to produce a happy ending.

As humans analyzing that action, it is important to honestly think through how we would have reacted through that. If one doesn’t sell on March 19 probably the best thing to do is to hold. Unfortunately holding through an almost $7/share loss is nobodies idea of pleasant. Visualization of scenarios is critical.

The PPO histogram is green for a second straight day. This is a condition that didn’t exist on the March 18 buy signal.

There is serious weekly resistance around here going back years, and KRE isn’t the greatest market to use this strategy on. Still, the positive outweighs the negative although I don’t regret not going long at the close, there being several other compelling long options.

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