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This ETF Looks Weaker Than The Rest ⎯ Time To Short?

ETF Watchlist

The Fed has broken the market yet again, sending it lower after deciding to raise interest rates once more by a quarter of a percentage point. After the announcement, stocks all across the market fell, led by financials and energy.

With all the turmoil in the financial sector leading up to yesterday, we think this could be an area of the market to keep on watch, more specifically, the regional banks.

SPDR S&P Regional Banking ETF (KRE)

Experts have all chimed in with their thoughts on how this banking crisis could play out, but few have said we are fully out of the woods at this point. One of the most prominent of these famed investors who has said the worst has yet to come with regional banks is billionaire investor Bill Ackman. Should the ground give out on this industry, a short trade could be entered and traders could let this one ride.

This could be one of the higher probability trades as depositors lose faith in the banks, especially the smaller ones. Given what happened to First Republic Bank recently, it isn’t too far fetched to think other banks of smaller or similar size could follow suit. Keep this ETF on your radar if the market continues to pull to the downside.

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Good Luck With Your Trading!

Christian Tharp, CMT

This post was originally published on Wealthpop