A Rare Signal is Firing for Regional Banks VIEW IN BROWSER BY LUCAS DOWNEY, EDITOR, TRADESMITH’S ALPHA SIGNALS When markets are at all-time highs, finding oversold setups are few and far between. That makes them golden opportunities. Last week we discussed how financial stocks have suffered alongside the recent loan losses at high-profile regional banks. Sour bets tied to Tricolor Holdings and car parts supplier First Brands hit the banking space hard. In fact, one rarely cited technical measure just hit the most oversold reading since April 2025… the tariff crash low. Today, we’ll make a bold call that regional bank stocks are ready to rip… and make new all-time highs in due course. Then I’ll offer up the highest-ranking banking stock at TradeSmith… which is nestled right in the belly of seasonal synergy. Zero Stocks in This Regional Banking ETF Are Above Their 50DMA Once headlines uncovered troubles at regional banks, stocks were in freefall. No tickers were spared as the recent peak to trough saw the SPDR S&P Regional Banking ETF (KRE) notch a 12.1% decline from Sept. 18-Oct. 16. But this on-the-surface analysis misses a hidden golden nugget. At the lows on Oct. 16, a very rare setup triggered. Zero stocks in the KRE ETF were above their 50-day moving average. This marks the first time this has occurred since the tariff crash low in April 2025. Below, notice how when we hit zero, it didn’t last long. We are currently at 10.81% of constituents above their 50DMA: 
Now have a look at the times when a zero reading occurred on KRE ETF. The last time was the bottom of the April crash lows: 
We’ve all been told that the trend is your friend. Catching a falling knife is rarely advised when trading. However, there are occasions when a selloff is so nasty, it triggers a bullish snapback signal… this being one of them. Since 2006, there have been only 147 instances when zero stocks in the KRE ETF were above their 50DMA. That amounts to nearly seven days per year when this rare setup hits. Here’s why it’s so powerful. When zero stocks in the KRE ETF are above their 50DMA, here’s what happens on average next: - One month later, KRE gains 5.4%
- Three months later, KRE jumps 10.1%
- Six months later, KRE climbs 14.9%
- 12 months later, KRE soars 35.9%
- 24 months later, KRE rips 56.8%
To take this study one step further, I’ve also included returns from 2009 forward, post the GFC. Returns tend to be larger with higher win rates: 
Given KRE has jumped 5.3% from the recent trough, this study proves that there’s a lot more fuel in the tank for banks. And given that KRE’s all-time high on $78.78 in January 2022 is 29.6% higher than current levels, don’t be surprised if we take that level out next year. For those looking for a signal stock to play this theme… we’ve got you covered. Bancorp (TBBK) Shares Sit Right in the Middle of Seasonal Synergy ETFs are baskets of stocks. Understanding the best names is paramount to outperform. Bancorp (TBBK), headquartered in Delaware, handles specialty finance segments, including non-SBA commercial real-estate loans, SBA loans, and more. The company has seen interest income grow from $308.3 million in 2022 to $551.6 million in 2024. This growth spilled over to the bottom line with net income reaching $217.5 million in 2024, up 67% from 2022. Bancorp shares are one of the few names in KRE with share above their 50DMA: 
But what makes this stock special are two criteria. First, the company is sitting right in the middle of TradeSmith’s Seasonal Synergy. That’s when the stock has historically gone up 80% of the time (or more!) at a certain time of year… plus, the stock’s at its optimal Relative Strength Index (RSI) reading now. Over the past 15 years, TBBK’s shares have always gained from Oct. 2-Nov. 26. Here, you’ll notice that over this two-month period, Bancorp shares average a solid 17.12% during this window: 
This, to me, is a great way to play for upside in regional banks. Bet on the best. Now the second reason TBBK shares are special comes down to its outstanding Quantum Score of 93.1. This near-perfect score comprises a 90% fundamental score and 95.4% technical score. Betting on TBBK is like betting on the top of the class: 
There you have it. Regional Banks are one of the few areas screaming oversold. Take an average approach by owning the KRE ETF outright. Kick it up a notch by focusing your bet on Bancorp shares. TradeSmith software spots opportunities others miss. Can your portfolio win without cutting-edge software? Maybe. Just don’t bank on it! Regards, 
Lucas Downey
Editor, TradeSmith’s Alpha Signals Note from Ashley Cassell, Managing Editor, TradeSmith Daily: What I appreciate most about software tools like ours is how decisive they make you. You get a read on an opportunity like Lucas uncovered in the regional banks… then Jason Bodner’s Quantum Score finds you the best stocks to consider. Done and done. Tomorrow we’ll be bringing you a similar “one-two punch” courtesy of Andy Swan’s social-media insights – and Louis Navellier’s Stock Grader. In the meantime, you can preview what we’re calling The Ultimate Stock Strategy in this replay of their webinar. See, not a lot of stocks offer superior financials AND online buzz from customers who consider their product the “next big thing” they can’t get enough of. Only 2% of stocks make the grade for both Louis and the Swan brothers, in fact. And from there, the five-year gains averaged 244% in our backtest. Best of all, in my view, are all the loser stocks the strategy steers you away from. In that same backtest, the “stocks to avoid” would have prevented losses up to 97%. To get the current lineup of stocks to buy and avoid in our Ultimate Stock Strategy, go here now. | 
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