Prepared for you by Randy Dunham
October 20, 2026
THE PRINT
Banks may be setting up for a short-term rebound.
THE CHART(S) / DATA
Last week, the State Street SPDR Bank ETF (KBE) underperformed the S&P 500 by -12% over the 50 previous trading days — that’s a statistically meaningful amount.
Here are a few datapoints you should know:
KBE underperforms the S&P 500 by 0.4% on average over a 50-day period.
The -1 standard deviation level is -9.7%. The spread fell below this level at the end of September.
Forward returns have historically favored banks over the following 50 trading days. Banks gained 6.85% on average, compared with 3.11% for the S&P 500. That’s a relative gain of 3.74 percentage points.
Friday’s reading improved to -8.1%, moving back above the -1 standard deviation level, and Monday’s reading held above that threshold.
Although the spread is now above the -1 standard deviation level, it remains close to that threshold and appears to be turning higher.
The KBE vs. S&P 500 ratio is also near levels where we’ve seen relative rallies in banks:
Takeaway: Although banks have been hit hard over the past couple of months, their relative performance makes them interesting on a short-term basis. This could also point to a broader relief rally in rate-sensitive areas that have been hurt by the aggressive move in higher yields.
THE TAPE
THE HIGHS AND LOWS
SPREAD THE WORD!
CHECK OUT OUR TWITTER AND YOUTUBE TOO!
Material, data, and information in this newsletter are for informational purposes only. This is not tax, legal, or investment advice, and does not constitute a suggestion, solicitation, or offer to buy or sell securities. TTI believes this information is reliable but does not warrant its completeness or accuracy.