Top Markets in the United States have been battered after the collapse of Silicon Valley Bank, the 16th largest bank in the country. The rapid decline of the bank ignited a debate over whether the federal government should step in as deposits above $250,000 were not insured. This left many vulnerable investors at risk of financial ruin.
Ultimately, the U.S. federal government elected to pursue a bail out for Silicon Valley Bank. This injected some much-needed optimism back into the markets. Moreover, the U.S. Federal Reserve and other central banks in the developed world have pledged to pursue a joint liquidity operation. Experts have also speculated that the aggressive rate tightening policy from central banks may be paused in the face of this turbulence.
Is it worth buying into the dip as U.S. bank stocks have been hit hard in this climate? The BMO Equal Weight U.S. Bank ETF (TSX:ZBK) is designed to replicate, to the extent possible, the performance of the Solactive Equal Weight US Bank Index, net of expenses. Shares of this exchange-traded fund (ETF) have plunged 28% in 2023 as of close on March 17. The ETF is down 39% compared to the previous year.
Shares of this ETF currently possess a Relative Strength Index (RSI) of 18. That puts this fund in technically oversold territory at the time of this writing. The vote of confidence from the federal government should be music to the ears of investors right now. I’m looking to jump head first into this volatile market and take advantage of low prices.
