PNC looking weak...Earnings on watch.PNC technically looks broken and on the verge of more downside.
Can PNC pull a rabbit out of the hat this banking earning cycle?
Or will the downside pattern prevail?
KRE
EWBC - Next Shoe/Bank to Drop.Controlled Demolition in ProgressGood Friday but not for EWBC and $KRE components.
Controlled Demolition in Progress.
Treasury and FDIC demonstrated zero interest saving shareholders of SIVB (wiped out, the buyer of assets got $16B+guarantees for loans).
Same will go for the rest of $KRE = any assets are at deep dis count.
Can't save them all (nor they would want to).
Industry consolidation.
The End.
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations...
KRE Regionals still not out of the woods.Checking out a chart of KRE the regional banks have been the epicenter of the latest banking crisis. The FED has responded with BTFP to try and get ahead of the problem of mark to market losses on MBS and treasury holdings, but is it enough? I would have expected confidence in the sector to be somewhat restored and stock prices to have a relief rally. But prices have been stuck in a range as the broader market continues to climb. This is concerning for anyone who thinks this rally has more legs and something I'll be monitoring closely in the coming weeks.
$QQQ BULLS Continue but at KEY Resistance, PCE Data tomorrow- SPY QQQ gapped up again but ended up closing within todays trading range, unlike yesterday bulls have a strong follow through after open.
- PCE Data tomorrow morning 5:30am PST
- QQQ closed around key daily resistance.
- End of the quarter and month rebalancing tomorrow will bring lots of volatility
- Will XLF / KRE join team bull or QQQ / SMH join team Bear?
- i am slightly more bearish at this level but so far theres no red flags for the bulls at all for QQQ SMH SOXX
KRE Diving Lower, Bearish pennant - Be Your Own Bank..Treasury and FDIC demonstrated zero interest saving shareholders of SIVB (wiped out, the buyer of assets got $16B+guarantees for loans).
Same will go for the rest of $KRE = any assets are at deep dis count.
Can't save them all (nor they would want to).
Industry consolidation.
The End.
WAL - Catching falling knife 101Treasury and FDIC demonstrated zero interest saving shareholders of SIVB (wiped out, the buyer of assets got $16B+guarantees for loans).
Same will go for the rest of $KRE = any assets are at deep dis count.
Can't save them all (nor they would want to).
Industry consolidation.
The End.
Daily $QQQ Market Breakdown, Potential Bull flags in Tech Sector- SPY and QQQ have been very choppy due to sectors rotating around may potentially continue unless we start seeing XLF forming daily uptrends and joining team bull.
- Or we see XLF / KRE go sideways and QQQ and SOXX/ SMH join team Bear.
As of now there are zero red flags for QQQ and SMH daily time frame so i am slightly more bullish in my intra-day scalp trades. Wont be holding anything overnight until we get a clear direction in the market i am open to both bearish or bullish trades just want a clear direction.
US10Y has not broken the support yet, all eyes on monthly close.It might appear on daily and shorter time frames that US10Y has broken the trend, dating back to 2020.
Weekly at key support level.
it will save the regionals (yield dives due to massive QE, HTM portfolio's MTM improves) or will destroy them (KRE).
PACW 90% chance the pattern resolves in ... Dive Dive Dive! Treasury and FDIC demonstrated zero interest saving shareholders of SIVB (wiped out, the buyer of assets got $16B+guarantees for loans).
Same will go for the rest of KRE = any assets are at deep dis count.
Can't save them all (nor they would want to). Industry consolidation.
The End.
$QQQ $SPY BEAR LACK Follow Through, Key Levels to Watch- $SPY $QQQ bear had all its chances to bring QQQ down after a bear break this morning out of the tightening range we had in the last 4 days but bears couldn't follow through.
- Want to see QQQ Bulls gain back its hourly uptrend and break above 308 area of resistance.
- want to see XLF / KRE bounce for SPY & SPX to break out of its equilibrium bull. of course vice versa for the bears.
- zero red flags on the daily time frame for SOXX / SMH / QQQ
$TSLA Price Action Breakdown, $QQQ Future Price Outlook- $QQQ about to break its tightening range, this will be very important for TSLA,
- currently TSLA does not have enough relative strength to hold up if QQQ breaks bear. so it will likely break bear with it.
- Bullish pattern: Daily Inverse H&S Weekly Cup & Handle
- XLF / KRE gapped up nicely but bear took over after cash open.
Trade Idea: MKTXThis financial has been holding up very well considering XLF & financials have been obliterated.
One of the very few relative strength financials holding above key daily moving averages.
If financials see a technical bounce this stock will likely breakout to the upside.
3 Price level to do DCA on Bank ETFDCA method
First - $39/$40 - 1st bullet
Second - $35 - 2nd bullet
Last - $27 - Final bullet
As we know, Bank ETF is affected by SVB saga. However in long run, after the saga drama over, we may see KRE recover back in future.
Therefore, we may apply DCA method to slowly accumulate into it.
$QQQ Equilibrium In Play till Monday. $SPY need 1h trend change- QQQ Equailibirum key break will be Monday which will determine which way SPY is going to move.
- SOXX / SMH turning from lead bull into lead bear today, weakest sector since Dec 2022. May drag down QQQ if it continues. Will short this sector if it continues on SOXS.
- SPY bulls want to see a hourly uptrend form, Bears want to see QQQ bear break Equilibrium and drag SPY down.
- XLF / KRE gapped down and bounced all day, big enough bounce now for bulls to try to form an hourly uptrend, but before that bulls has changed nothing on the daily timeframe.
KEY TOP WATCH $QQQ Equilibrium Pattern Tomorrow - QQQ equilibrium pattern is going to be key break for which direction market is going the next couple days,
- XLF KRE bear break to new lows will break QQQ equilibrium bear and then drag SPY down even more.
- Yellen flip flop - no deposit guarantee yesterday to today it will be. (the more they flip flop back and forth the more we see them as less confident)
- SOXX / SMH semi sector also helping QQQ with such a strong move up, QQQ bear break will likely mark a temporary top on this sector. need to see NVDA drop too.
FOMC Price Reaction Analysis, Support & Resistance, $SPY/$QQQ- Looking for a hourly Bear flag on SPY and QQQ after this huge move down.
- XLF and KRE top watch to see if we break fear lows/52 week low. Fear would likely come back in if we do break the lows
- looking for SOXX/SMH to go from lead bull turning into lead bear
- Rate hikes is a head wind more for QQQ then SPY, so after Powell saying no rate cuts this year, we would likely see QQQ lead to the down side as well just like it lead to the upside.
- FOMC reaction day after is always the real move, so tomorrow we need to see if bears can follow through or todays just a small reaction move.
Demonstration of the Wave principle in real life KRE
If you want a demonstration of the Wave principle in real life look no longer than KRE.
It is a textbook example of an impulse wave started on 23 March 20220.
Wave almost 61.8% retracement of Wave 1
Extended 3rd wave with a 2.00 multiple of Wave 1
Wave 4 has almost 0.382 retracement of Wave 3.
And the most important one: the entire impulse wave is divided perfectly into golden ratio. 0618/0382
This impulse wave finished on 19th January 2022. Since then the corrective phase has begun.
We have 2 viable scenarios over here
Scenario nr 1.
An ABC zigzag
We clearly have a minor impulse wave down finished in 5 waves that could be intermediate wave (A).-finished on 16th June 2022
Followed by a running flat ABC for wave B. notice the truncation of minor wave C of (B) warning us about the underlying selling pressure in KRE.
And that's precisely what happened in wave (C). That is what an impulse wave 3 of (3) looks like. Fear response appropriate!
The Fibonacci ratio for wave (B) is precisely 0.382 retracement of wave A . The most common one in a zigzag.
Guideline of equality
Waves (A) = Wave (C) at $42.65 normal in a zigzag. So with this interpretation probably one more minor wave down and everything will be roses in the regional banks.
What is not normal in a zigzag is the slope of wave C should be less aggressive. So this brings me to an alternate count.
Scenario nr 2
Because of the slope and severity of this late sale this makes it a wave 3. As I said before has all the marks of impulse wave 3 down in this case.
So the whole correction becomes just waves 123 with waves 4 and 5 still to come to make just wave (A) of the decline.
I will leave it up to you to decide which interpretation is most appropriate.
Legal Disclaimer: The information presented in this analysis is solely for informational purposes and does not serve as financial advice.
Capital One....technical Breakdown loomingWith major weakness in the banking sector we are still seeing the contagion play out. Some banks are more at risk than others.
Based off of a blow out in Credit Default Swaps. The bond market is showing there is tremendous risk in this bank.
Just like Credit Suisse CD's blew out befroe the collapse, we are watching COF credit defaults blowout.
KRE / XLF / QQQ / SPY Triple Top Resistance into Wednesday FOMC- KRE and XLF still in a bear flag territory, Both are closing in on their tightening range and will break very soon either tomorrow or Wednesday. we will get a lot of volume and volatility once this breaks.
- QQQ & SPY have a Triple top resistance, if XLF break bull SPY will very likely break that resistance, so will watching all 4 closely.
- FOMC Wednesday 0.25BPS is still around 70% chance, what bulls want to see is Powell saying we are pausing after this hike, Bears want to see more 0.25BPS hikes.
An unfolding banking crisis - or not - potential market reactionIt could get pretty crazy in the markets this week, and it may start on the futures open at 9am AEDT – headlines have been rolling in today and everyone is on edge for answers – it's complex, but I’ll try and explain what we’re looking out for.
Let us first focus on the US banks – they are a central focus and really the big issue at hand.
EU banks are quite different, they didn’t see the same sort of rapid deposit growth as US banks post-pandemic and had a greater propensity to put depositors' cash on the ECB’s balance sheet – unlike US banks who bought a load of high-quality assets for the coupon income. But they did so at near-zero yields and as the Fed hiked rates these assets fell dramatically in value and by far more than the banks were getting from the interest (i.e., the fixed coupon payment).
Credit Suisse is the key issue in Europe, but that is a very different story – more on that below.
Back in the US - The major concern I see here is the FDIC (www.fdic.gov) stipulated last week that they will cover non-insured deposits held with a bank over $250k ($250k was always the limit deposits would be insured up to in case of a failed bank). SVB Bank’s full deposit base was told they would be made whole, but the market quickly understood that it wasn’t a banking-wide blanket guarantee – it was an implicit guarantee, and each future bank that failed will be considered on a case-by-case basis.
To have a wholesale guarantee covering EVERY BANK DEPOSIT needs congressional sign-off and that is very unlikely - this is key to market sentiment. We also heard last week that the Fed had set up a new credit/liquidity facility and enhanced existing ones for banks that needed liquidity – the idea here was that banks could get capital from the Fed and pledge assets they hold on their balance sheet (USTs, mortgages etc) as collateral and to get capital for a predefined period at the ‘par’ value (rather than the more distressed price they are trading now – let’s say 80c in the $1.
Given we’ve seen the Fed’s balance sheet increase by $300b last week as mid & smaller banks took them up on these loans, this shows how much they needed the capital (bad) but some see this as a form of QE (Quantitative Easing) and hence we’ve seen gold rally strongly and eyeing all-time highs
Essentially, it’s not QE, but it is positive for risk assets because it means if we do see further deposit outflows banks won’t now need to sell assets for a what would be a loss – which was one of the major issues with SVB Bank.
As said, gold rallied hard (+3.6%) and the USD fell…. gold printed new ATHs in AUD, GBP, and JPY terms – Equity markets, however, were sold…The US2000 (which has a decent representation of US mid-sized banks) fell 2.6%. Gold futures are above $2k and but in spot gold we eye an all-time high (ATH) of $2075 in USD terms.
There was talk on Friday that “dozens” of other banks may fail soon as depositors take their cash and run. In fact, the WSJ said 186 banks are facing the same issues/pressure as SVB bank - this has the market on edge, and they crave an even bigger response.
We’re hearing today that a group of 110 US banks is requesting full FDIC insurance for all deposits regardless of the amount – this would give depositors absolute peace of mind not to pull capital from the bank and place the funds in ultra-safe money market funds. These funds flow are opaque but incredibly important.
For perspective, if any bank fails from here and the FDIC does not make all depositors whole the market will take this as a systematic event, regardless of the bank – it will rock the markets in a massive way – which is why it won’t happen at this point.
Case in point, and this is very important - Late last week we heard First Republic Bank (FRC) had been given a $30b injection of deposits from 11 of the biggest US banks. A private market response is old school and shows the banking industry is working together. The globally systemic banks looking after the smaller banks is 100% designed this liquidity to show their faith in the FDICs deposit insurance.
Why? These banks are all non-secured creditors for FRC and, in theory, could lose it all if First Republic go under and the FDIC doesn’t pay out.
Unfortunately, on Friday shareholders didn’t take heart on this incredible action and sold FRC’s equity down 33% and the share price now eyes new lows – clearly, not a great look and this resonated through US equity markets. Deposit holders may get it all back, but equity holders’ wont…the KRE ETF (S&P regional bank ETF) closed -6%.
There were/are worries that SVB financial will not get a buyer – talk is First Citizen Bank are looking at this acquisition – if true, that would be a risk positive.
Warren Buffett held talks with a number of regional bank CEOs in the last 2 days – Buffett did this well in 2008 by taking a stake in Goldman and in 2011 in BoA – he is a vulture, but the kingmaker in times like this – he has an incredible war chest of cash and will pick up distressed assets all day.
Buffett won’t buy the float of these banks obviously but taking stakes could send a message of confidence to equity investors and maybe depositors – we listen for news flow and headlines on this tonight and Monday. It could move markets.
In Europe, it's all about Credit Suisse – Unlike many US banks, CS are fine from a liquidity perspective – they had a huge capital injection from the Swiss Nat Bank late last week to buy them time, but its capital levels are pretty good.
Their issue is the confidence equity investors have in its business model, notably around the investment bank (IB) division. They lost their biggest shareholder – Harris Associates - recently who had held size for 20 years but liquidated on frustrations about how on the IB business performing and its strategic direction. They also had a bunch of ‘bad luck’ with Greensill and Archegos insolvencies.
All the talk in UBS will buy its wealth management and asset management business and divest its IB business.
Clearly the big moves from the SNB show CS are ‘too big to fail’ but will UBS pull it off by the Monday futures open?
Depositors are ok as they are backed by the SNB, but if there is no deal by Monday markets could ask ‘what if’…CS will absolutely drive EU equity markets and the EUR.
Scenarios:
So, a lot to play for – we could get Buffett doing his thing, married with UBS buying parts of CS – risk assets will fly – unclear how the USD trades as this is good news for both the US and EU, but I suspect if UBS buy CS this will dominate and EURUSD rallies hard and gold rallies too. It will increase the prospect of the Fed hiking this week.
Conversely, we don’t get clear headlines by equity futures open on UBS/CS and risk takes a bath as traders pay up for risk-off hedges….pricing risk here is difficult.
PACW PacWest Bancorp Breaking Out With VolumeWhile Bank Regulators are trying to put together a package to save FRC First Republic Bank with JPM and Morgan Stanley, other hammered regional banks are looking like a bottom. PACW has a book value of 29.50 and a cash per share value of 17 dollars per share. FDIC Insured deposits account for 40 percent of total deposits, making a run less likely than FRC which has a 20 percent of depositors . These are compared to SVIB and SBNY which had a total of 3% and 6% insured by FDIC.
PPI, XLF No Bear follow through, Rate Hikes, QQQ Lead Bull- PPI data came in better then expected increasing the likelihood of a pause to 50-60%
- XLF gapped down new lows but closed around cash open area, meaning there wasnt a lot of bear follow through after the gap down. The first sign bulls want to see is XLF holding its lows and start to bounce or even just going sideways is good for tech bulls. Bears want to see new lows.
- QQQ lead bull held up the SPY. making 15m higher lows each time while SPY was making new lows in the end afternoon once XLF started bouncing just even a little bit you saw both SPY and NASDAQ had a nice rip higher.
- Looking for SPY to form its daily uptrend then i would be playing on the bull side for swings on TQQQ or SPXL, for now im still scalping day trades and going all cash before end of the day.
- Next FOMC meeting is going to be a lot more key then any other previous ones to see if Powell actually pauses or hike 0.25BPS even if he hikes 0.25 we still want to see what he say in his speeches is he going to say this is the last hike and we are pausing after this 0.25.
PPI Data, Rate Hikes, QQQ / SPX Support and Resistance- CPI data came in expected today, excpet core is 0.1% hotter market didn't really care since we need something really hot to not get a 0.25bps
- PPI data likely will come in expected as well today, since CPI was pretty aligned so technical matter more now
- SPX came close to 200 MA today rejected the 3940 area but QQQ is above 200 MA
- QQQ and SPX reject resistance at the same time
- QQQ broke 294.5 support (yesterdays triple top resistance) in the afternoon and bears didn't follow through bulls V shaped into close
- KRE and XLF both still in daily bear flag territory.
KEY QQQ & SPX BOTH is still under resistance even though we V shaped we closed right under it, so still in the chop range, I am neutral now yesterday i was bull lean and played the bull move this morning as i mentioned when we broke the triple top resistance at 294.5 QQQ I am going long. Now at this range its anyone's game since there are both bear thesis and bull thesis that are both correct at these levels. currently all cash took profit this morning likely scalping depending on which side we break tomorrow.
