Bank Stocks In Decline: A Price Chart Analysis

Silicon Valley Bank collapses and the effects of contagion fear are immediately apparent in the stock price declines of bank stocks all over the country.

Photos and videos of customers standing in line outside the locked doors of a Silicon Valley Bank branch — waiting to withdraw their money — has investors in financial institutions selling their shares.

“Why wait?” is the thought on Wall Street when scenes from the Jimmy Stewart classic movie It’s A Wonderful Life begin to play out in real life. The Federal Deposit Insurance Corporation is on the case all weekend, but by Monday morning, who knows how many other regional banks face similar issues?

The stock market seems to know and selling began at the open Friday and lasted all day. Here are the price charts to prove it.

The daily chart for the benchmark ETF known as the Financial Select Sector SPDR Fund, aka the XLF XLF is here:

It looks as if those who closely follow this sector began to unload shares on Tuesday and the selling really accelerated on Thursday before breaking below the December lows on Friday on the truly heavy volume (the reddish bar below the price chart). Those with knowledge of the situation had been getting out already.

The fund has 67 holdings, the biggest of which are Berkshire Hathaway BRK.B (down .39% Friday), JP Morgan (up 2.54% Friday) and Bank of America BAC (down .88% Friday). These big financial institutions did not suffer greatly as you can see — the major losses came in the regional banks.

Take a look at the daily price chart for the SPDR S&P Regional Banking Index:

So that’s a Friday session of -4.39% for the regionals versus -1.82% for the majors. The KRE KRE contains 143 bank components and one of its largest holdings was Silicon Valley Bank which had recently represented about 2% of the fund, but no more.

The fund’s top 3 components are now Western Alliance Bancorp (2.15% of the ETF), East West Bancorp EWBC (2.13%) and Truist Financial TFC Corporation (2.08%).

Here’s the Western Alliance Bancorp daily price chart:

From the $80 level in early February to the $30 level during Friday’s session before closing the week at $49 — that’s quite a range and on extraordinarily heavy volume. Buyers entered late in the session and propelled the stock higher than the lows.

The East West Bancorp daily price chart looks like this:

From above $80 in early February to a low of $61 is a quick 23% drop from peak to trough. You don’t see too many daily charts that show a recent high above previous resistance areas (mid-August, 2022) and then, just a few months later, demonstrate a new low established below the previous support areas (late June, 2022).

Here’s the daily price chart for Truist Financial Corporation:

This one shows the odd mid-January opening trade mistake that took many NYSE-listed stocks suddenly much higher and then dropped them back down again. Truist sellers outdid buyers every day of this week with the Friday dumping taking the price below the mid-October low.

These 3 regional bank charts display just a taste of the damage done with the contagion fear coming off of the Silicon Valley Bank collapse and closing. That a major like JP Morgan ended the day with a 2+% gain suggests that the very big banks will benefit from the outcome of the overall situation.

Not investment advice. For educational purposes only.