Are Smallcap Regional Banks About to Rip Higher?

Stocks hit new all-time highs the week before last with the S&P 500 and NASDAQ both hitting the week with their highest weekly candles in history.

As impressive as this is, the rally has been largely driven by the big tech plays which comprise 30% of the S&P 500’s weight. When you remove the impact of big tech by using an equal weighted S&P 500 (meaning each of the 500 companies receive equal weight), the market remains below its all-time highs.

Indeed, certain sectors have lagged significantly during this recent run. Regional banks are one of them. The regional bank ETF (KRE) peaked back in late 2021/ early 2022 and remains well below those levels.

However, all of this might be changing.

At Phoenix Capital Research, one of the key metrics we track are insider purchases. Insiders might sell shares in their company for any number of reasons… but they only buy for ONE reason: they expect shares to go much higher in the coming weeks and months.

Lately, we noticed a wave of insider purchases at small cap regional banking plays.

Insiders began buying Shore Bancshares (SHBI) in May with multiple Directions adding to their positions.

In June a round of insiders loaded up on Central Valley Community Bancorp (CWBC).

Insiders are also buying at Bankwell Financal Group (BWFG).

Byline Bancorp (BY)

As well as Mid Penn Bancorp (MBP), Auburn National Bancorporation (AUBN), Coastalsouth Bancshares (COSO), and more.

Whenever you see insiders buying up shares in numerous plays in a specific sector, it usually heralds that a bull run is coming. Will this time be different? We’ll see.

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Graham Summers, MBA

Chief Market Strategist

Phoenix Capital Research