ABN - Dutch Bank - outlook
Updated
We made the run on the vaccination news in november and closed our position at the top. Then we went short. Last week closed shorts and are in cash.
Why?
We are at a crossroads. We do not know what effect the dividents news will have on the bank stocks, and same goes for the increased ECB support/lending. So it was safer to wait and see. We did not see much action from the news (no major movement). ABN tried now several days to break out of the red channel, but failed and kept re-testing support.
It is a critical moment for the banks. With major lockdowns ongoing and the realisation that vaccine rollout will take time, there is not that much to look forward to in the banking sector. We might see a wave of foreclosures of small businesses due to extended lockdowns of restaurants, cafe's, and non-essential stores (clothing etc.), and we still have tourism industry and airports that are bleeding. Big brands will still find traffic to their webstores, but small businesses will struggle.
On the upside, the european economy is robust and several sectors are overperforming (IT, ecomomerce, semi-conductors, metal, to name a few).
Will the critical resistance at 7.918 hold? or are we testing lower? Let's simply wait and see. There is no major play to be made here until we can get a confirmation if the red channel will be broken, or continue downward. Shorting here based on the stochastics indicator is an option, but I already took profit from my short from the top and as we reach bottom shorting becomes more and more risky as a move. Also there are other more interesting trades out there right now.
Stochastic indicators on the weekly and daily tell us we are poised for longer downward movement. However in this market we have seen some pretty unexpected volatitliy up and down, so keep a watch for a break in the pattern and re-adjust strategies based on that. See below charts:
Trade safe.
Remember, trade the chart, not the company!
Why?
We are at a crossroads. We do not know what effect the dividents news will have on the bank stocks, and same goes for the increased ECB support/lending. So it was safer to wait and see. We did not see much action from the news (no major movement). ABN tried now several days to break out of the red channel, but failed and kept re-testing support.
It is a critical moment for the banks. With major lockdowns ongoing and the realisation that vaccine rollout will take time, there is not that much to look forward to in the banking sector. We might see a wave of foreclosures of small businesses due to extended lockdowns of restaurants, cafe's, and non-essential stores (clothing etc.), and we still have tourism industry and airports that are bleeding. Big brands will still find traffic to their webstores, but small businesses will struggle.
On the upside, the european economy is robust and several sectors are overperforming (IT, ecomomerce, semi-conductors, metal, to name a few).
Will the critical resistance at 7.918 hold? or are we testing lower? Let's simply wait and see. There is no major play to be made here until we can get a confirmation if the red channel will be broken, or continue downward. Shorting here based on the stochastics indicator is an option, but I already took profit from my short from the top and as we reach bottom shorting becomes more and more risky as a move. Also there are other more interesting trades out there right now.
Stochastic indicators on the weekly and daily tell us we are poised for longer downward movement. However in this market we have seen some pretty unexpected volatitliy up and down, so keep a watch for a break in the pattern and re-adjust strategies based on that. See below charts:
Trade safe.
Remember, trade the chart, not the company!
Note
Strong drop at opening, we could go lower.
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