Go with regional banks

Regional banks are breaking out through its trading box, to the upside! As you can see from the ETF for regional banks (KBE), it has been trading sideways for over a year now between $30-34. In other words, it has been confined in a trading box but now it is showing up its head above the box. Technically it is significant as it is often the early sign that the trend is changing and a new uptrend may be starting. I think what’s going on in the macroeconomy dose support this move. You see, fundamentally regional banks are much more sound and stronger than the big banks as they are more disciplined in focusing on the actual banking business and much less involved in the fancy stuff like derivatives or subprime mortgage that had almost wiped out the big boys. Now it becomes more and more likely that the Fed will start to raise the short-term interest rates in the not too long future. This will certainly benefit very much the banks in general and of course the regional banks as well. I think this breakout is the way the market is telling us that regional banks will be running higher from here.  Of course, no trend will start straight-line without volatility. And also we cannot completely rule out the possibility that this is just a false breakout although I do believe the regional bank sector is ready to move up.