By Tom Aspray, MoneyShow.com

The reaction of the overseas markets to the S&P downgrades announced after Friday's close has been very positive with stock index futures actually showing nice gains. This week, of course, is an important one, with many key quarterly earnings reports.

In running a weekly scan of bank stocks, I was interested to note that over half of the 10 bank stocks that are closest to their weekly Starc+ bands have either already reported or are scheduled to report earnings this week.

All are less than 6% below their weekly Starc+ bands, so a positive reaction to earnings could easily push prices above the bands. When price is near the Starc+ band, it is a high-risk time to buy and a low-risk time to sell (for more on Starc bands, see Buy, Sell, or Wait: A Way to Decide).

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The three bank stocks that I am focusing on today are also close to strong weekly resistance, suggesting that current shareholders who have nice gains already may want to book profits on further strength.

The signs of deterioration in the overall stock market that I noted last week still make a correction likely. One of these bank stocks stands out as an attractive buy on a significant correction.

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People's United Financial (PBCT) is $4.6 billion bank holding company for People's United Bank based in Connecticut.

• The stock traded below the weekly Starc- band for two weeks last August (see arrow), hitting a low of $10.50, but it closed last week at $13.66
• The weekly chart shows a band of resistance between $14 and $14.50 (dashed lines) with the weekly Starc+ band at $14.30
• The weekly downtrend, line a, is at $15.25
• Weekly relative performance, or RS analysis, has improved but is still below strong resistance at line b
• Weekly on-balance-volume (OBV) is acting better, as volume was strong last week, and the downtrend, line c, has been broken. Weekly OBV is in a clear uptrend
• PBCT has initial support at $13.20 with stronger support at $12.20-$12.60; the stock currently yields 2.6%

BB&T Corp. (BBT) is a $19 billion mid-Atlantic Bank that was discussed in Barron's this week amidst a forecast for a 30% gain. It is already up 44% from the August low at $18.92.

• The weekly Starc+ band is at $28.57 with the converging trend line resistance (lines d and e) in the $29.10-$29.60 area
• A 30% gain from current levels would take BBT to $35.40
• RS analysis shows a clear short-term uptrend, line g, but is still below the major resistance at line f
• Weekly OBV has broken its downtrend from the 2010 highs and is well above its rising weighted moving average (WMA); the heavy selling in October is consistent with a panic low
• There is first good support now in the $24-$25 area; BBT currently yields 2.4%

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