Ahead of earnings, short positions in regional bank stocks like TFC, KEY, and HBAN are rising, signaling potential declines. MTB shows smaller movement indicators, suggesting less volatility post-earnings.

The KRE Regional Bank ETF is currently at a high, and short positions have increased ahead of earnings announcements. This trend is also observed across all stocks reporting this week. Notably, TFC stock price has risen from a low.

Stocks reporting this week MTB, KEY, HBAN, and TFC have all increased by 4% to 6% over the past week.

Historically, these stock prices tend to reverse following earnings reports, with all but MTB expected to decline by approximately 3%.

For KEY, HBAN, and TFC, the short positions have risen this week, indicating bearish sentiment and serving as a historical predictor of potential declines.

TFC shows the most significant increase in short positions, up 10%. Historically, elevated stock prices coupled with increased short positions in TFC have been followed by negative stock returns.

The pattern in TFC is particularly pronounced, with the steepest slopes for both stock returns and short position changes leading up to earnings. The recent rise in TFC’s short position is the strongest among the group, suggesting the highest expected downward move based on historical trends.

In HBAN, while the return slope is substantial, the impact of short positions is less pronounced. The short position has increased from a low.

For KEY, a similar pattern exists, but the magnitude is smaller, with recent positive returns and increased shorting historically indicating moderate negative returns.

MTB exhibits a similar trend; however, the slopes (betas) are smaller, suggesting a lesser downward move or possibly none at all.

The increase in short positions across regional bank stocks indicates potential price reversals post-earnings, especially for TFC. MTB’s smaller betas suggest less impact. Historical trends point to caution in these stocks.

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