Bank holding company KeyCorp (KEY) seemed to be on the receiving end of recent turmoil in the banking sector as the share price of the namesake regional bank has halved in a matter of weeks.
Let’s review the position of the charts and indicators.
In this daily bar chart of Keys, below, I can see that shares were trading around $20 in early February and were briefly below $10 on Monday. The price broke its October low and was in “free fall” for a day.
Trading volume was huge. The daily on-balance-volume (OBV) line has formed a new lower low and the moving average convergence divergence (MACD) oscillator has moved below the zero line.
In Key’s weekly Japanese candlestick chart, below, I can see a falling window (a gap in a downtrend) and a large lower shadow on the most recent candle. A window or gap will act as resistance until prices close above the gap or window. The 40-week moving average is pointing to the downside and could provide resistance on a bounce.
The weekly OBV line has been weakening since the beginning of 2022.
In this daily point and figure chart of Keys, I can see a dramatic decline with a price target in the $2 area.
In this second point and picture chart of Keys, I used weekly price data. Here the software again gives us a downside price target in the $2 area.
Bottom Line Strategy: The sharp decline in the banking industry is surprising. These corrections should be bought in a bull market, but in a weak environment the answer is not cut and dry. Keep your powder dry for now.
Receive an email alert every time I write an article for Real Money. Click “+Follow” next to my byline for this article.