Regional Banks -- More Stress Ahead

NEW YORK (TheStreet) -- When I analyze regional banks, I focus on the 24 banks in the PHLX KBW Banking Index(BKX) , which may have peaked at $50.69 on March 19. This index includes the four banks considered "too big to fail" -- JP Morgan(JPM) , Bank of America(BAC) , Citigroup(C) and Wells Fargo(WFC) .

The BKX is up 55.7% since the October 2011 low and is up 24.1% year to date. Looking at the weekly chart for BKX we show that technical momentum (12x3x3 weekly slow Stochastic) reading is declining with BKX above its 200-week simple moving average at $46.00, which is a neutral configuration. My monthly, annual and quarterly value levels are $46.09, $42.98 and $41.10 with a weekly risky level at $51.30.

Fundamentally, 11of the 24 members of the BKX are rated a buy according to ValuEngine with the other 14 rated hold. The buy-rated regional banks are: BB&T Corp(BBT) , Citigroup, Capital One(COF) , Fifth Third Bank(FITB) , Huntington Banc(HBAN) , Keycorp(KEY) , PNC Financial(PNC) , Regions Financial(RF) , State Street(STT) , US Bancorp (USB) and Wells Fargo(WFC) .

Regions Financial recently repaid its $3.5 billion in TARP money received from the federal government. The company used proceeds from the sale of Morgan Keegan to Raymond James (RJF) and a $900 million common stock offering to raise the funds.

Wells Fargo recently mailed a notice to companies that have a Small Business Line of Credit Account indicating that the interest rate will rise significantly in this month. This increase may cause some small businesses clients to hold off hiring / expansion plans. With the prime rate at 3.25% the line of credit interest rate goes from 5.75% to 8.25%, as the spread to the funds rate rises from 2.50% to 5.00%.