Momentum is building for a breakout in bank stocks, says Katie Stockton

Bank stocks are improving from a technical standpoint as market leadership broadens beyond technology. The SPDR S & P Bank ETF (KBE) has a fresh technical catalyst in price terms, and its relative chart versus the S & P 500 Index (SPX) has turned the corner. Within the group, Citigroup (C) stands out with bullish long-term momentum and a recent breakout that supports additional upside follow-through. KBE has broken out from a triangle pattern in a bullish intermediate-term development within the context of its long-term uptrend. The breakout is supported by positive momentum, with the weekly MACD showing a decisive upturn. This improves the likelihood of upside follow-through over the coming weeks and generates a measured move objective of approximately $75. The breakout point and the 50-day moving average (MA) are initial support near $64. Long-term support is at the weekly cloud model. The relative setup is also improving for bank stocks. The ratio of KBE to the SPX has a breakout that reflects stronger intermediate-term relative momentum, suggesting banks can outperform the SPX into Q3. Longer term, the ratio is stuck in a neutral trend, but the recent improvement supports a more constructive tactical outlook for the group. C has a bullish long-term setup on its chart. The stock is in a well-defined secular uptrend above its rising 12-month MA, and long-term momentum remains positive. …