KRE: Adios AmigosNot the time to be long. Head & shoulders pattern with open gaps to fill below. No remaining support.
KRE trade ideas
If KRE retraces 50% of it's moveDPST goes to 9~.
Not bad.
Coincides with some resistance.
DivYield is 7% anyways
50% retracement is pretty standard.
KRE Is a reversal underway?KRE the regional bank ETF is down about 50 % YTD, with a couple of bank failures leading the
way. The question that arises is whether there is more downside. Faith and trust in the
the banking system is at risk. The big banks came in their rescue on First Republic. A run on
the little banks can hurt the big banks even Goldman Sacks. Holding treasuries with fixed
rates lower than current rate sucks for sure. The fed will clean up this mess and will
do it right and has started that process. KRE chart with the fisher transform indicator
and the zero-lag MACD tells me that KRE is now " reverting to the mean" & dropped below
the Fibonacci bands of the basis EMA. Line crossovers on the indicators are confirmatory.
I will seize the situation and add to my long position. Due you agree that this is picking low
laying fruit?
Regional Banks on the Brink!Zoom in and you will see that Regional Banks have closed several times now below this critical trend line. If the Fed fails to save them, deflationary recession/depression it is. I am banking on a Fed save. The Fed always protects it's own. Therefore, blow-off top incoming. Followed by hyper-inflationary recession/depression next year.
Should be a show.
Stew
KRE - Patience RequiredKRE has provided some of the most technically-sound short opportunities in recent memory, but it is approaching major support at which point the probabilities flip to the long-side (with disciplined risk management). Expect some choppy price action, but remain patient for one last leg down and a very promising long opportunity
SPX and KRE - ABC's and 123sQuick take on the SPX moves this week and the regional bank index - KRE
Have a great weekend!
Regional Banks are telling us everything about this market!Traders,
Though, I've expressed this all along this past year, regional banks are now confirming everything I've stated regarding JPOW and the FED only having two choices about the future of the U.S. economy: deflationary recession/depression OR hyper-inflationary recession/depression. The line in the sand has been drawn and crossed. Should the FED attempt to rescue the economy by pausing rates or even pivoting, we'll likely see hyper-inflationary recession at the very least. On the other hand, should the FED continue to focus on tackling inflation, then recession it is.
Watch this chart closely along with our DXY chart. They are currently leading EVERYTHING (stocks, crypto, commodities, real estate, everything).
Stew
Bank RunHello friends.
The 'Banking Crisis' is over. It's really been over since around the end of March, but now it's completely and utterly over as of this week because global search trends for 'Bank Run' have reverted all the way back into the normal range. Panic is gone. Since panic is gone, bank runs are gone. Bank runs only work when people are panicked, and people are objectively not panicked. At least, not depositors. Investors are still a bit spooked, as evidenced by the move in the regional banking sector ETF from 65 to 40 in relatively short order. They don't seem to realize that the banks are fine.
Our trading idea would be to long KRE at the bottom (not quite reached, we think it bottoms a bit lower), and ride it up back to at least $50. We think these types of crises also create very special investing opportunities due to the nature of fear, so we bought up shares in NEWT since we think it was beaten down by indiscriminate selling due to having a bank license even though it actually isn't even a bank on paper, and has a really low risk of a bank run due to the fact that the vast majority of depositors have below 250k in their bank segment. That play is more complicated, which may be why the market is mispricing it so egregiously. We think this is a massive opportunity to buy the stock and hold it for the next year or two. For a shorter-term play though, we would do something like buy month-to-expiration calls on KRE once it ticks down a little more. Either one can work well.
🔥 Failling Banks BULLISH For Bitcoin & Gold: But Why?Over the last two months there's been several that have gone insolvent and got eventually bailed out by the FED, or have been taken over by larger banks.
Initially, this looming crisis caused a lot of stress in the markets during the first two weeks of March. However, once Silicon Valley Bank got shut down & bailed out we saw a huge bullish move in both Bitcoin (helped by a short-squeeze) and Gold, whilst the Regional Banks ETF continued to make new lows.
Yesterday, there was a another big bank that has gone insolvent and has been taken over by JPMorgan. Stocks fell significantly and the Regional Banks ETF made new lows because of sell-offs in other banks.
This sparked another bullish move in both Bitcoin and Gold because investors are fleeing to safety. Physicals commodities like Bitcoin and Gold don't need a bank. You can buy them and store them either on your own PC or in your house. Furthermore, big banks like JPMorgan and the like saw their balances swell because they are deemed to big to fail, unlike smaller regional banks.
With the FED most likely increasing the interest rates further, there's a decent probability for more (regional) banks to fail. This will most likely be bullish for Bitcoin, since more money will flock to the relative safety that Bitcoin offers.
If the banking crisis will get very severe with, for example, big banks failing, it can spark a massive move of BTC towards >50k. The technicals don't support a move like this, but a macro-related event like big banks failing could trigger a massive influx of buyers.
Future will tell. All we can see now is that regional banks in distress is triggering a flight to 'safe' commodities like BTC and Gold.
Regional Banks Leading Market to Hell?Regional Banks have always led our economy during booms and during busts. You will note from this simple chart that one key trend line has measured our current secular bull market. Regional banks have remained above this trend line since it was first touched in 2009. Excluding March 2020 (Covid19), which is not valid data, regional banks have never dipped below with confirmation. My best guess is that if they do, it will spell the beginning of the end for the U.S. macroeconomy in its current secular bull run. Watch closely as regional banks are really flushing the toilets today. If not careful, they may also need a savior. Enter JPOW and the Fed for a surprised pause/pivot ...if so.
PacWest, NASDAQ:PACW : -36%
Western Alliance, NYSE:WAL : -31%
Metropolitan Bank, NYSE:MCB : -27%
HomeStreet, NASDAQ:HMST : -23%
Zions Bank, NASDAQ:ZION : -15%
KeyCorp, NYSE:KEY : -9%
HarborOne, NASDAQ:HONE : -10%
Citizens Financial, NYSE:CFG : -12%
Remember, of our four largest bank failures to date: Washington Mutual (-386 billion), First Republic (-$233 billion), SVB (-209 billion), and Signature Bank (-118 billion) ...three of these have occurred in the last 2 months ...and we ain't done yet, folks.
The true shitcoins are large centralized corporate banks. We must be ready to transition to an alternative currency solution. Enter Bitcoin/crypto. Be ready.
Best,
Stew
Regional Banking Monthly Log ChartRegional Banking ETF has priced in ALOT of those possible news events over 1 year ago.
2022
loss of upwards momentum
stay clear until wake up line is crossed
Long KRE 42.35Look daily stoch on bottom also look she is basing some
just looking swing long say maybe 54 if that then she will stop drop and make new lows.
We have earnings next week
KRE BreakdownKRE is continuing to breakdown. The penetration through the .618 level and confirmation below it indicate more downside to come...
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.
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.
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.
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.
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.
KRE June 16th 35/April 21st 55 Long Call Diagonal IdeaDo you ... fade this move?
Pictured here is a long call diagonal with the long leg out in June at the +90 delta, and the short leg out in April at the -30 to synthetically emulate the net delta of a covered call position (i.e., long stock/short call) where the short call of the covered call setup would be at the -40 delta strike.
Metrics:
Assumption: Neutral* to Bullish
Buying Power Effect: 15.09 debit
Break Even: 50.09 relative to 50.69 Spot
Max Profit: 4.91 ($491)
ROC%-Age as a Function of Buying Power Effect: 32.5% at max; 16.3% at 50% max; 8.1% at 25% max.
Alternative Setups:
April 21st 54 Covered Call. (Buy a one lot at 50.69, simultaneously sell the April 21st 54)
Metrics:
Assumption: Neutral to Bullish
Buying Power Effect: 48.09 debit (cash secured); 23.33 (on margin)
Break Even: 48.08 relative to 50.69 Spot
Max Profit: 5.91 ($591)
ROC %-Age as a Function of Buying Power Effect: 12.3% at max (cash secured); 25.3% at max (on margin).
April 21st 46 Short Put (25 Delta)
Assumption: Neutral to Bullish
Buying Power Effect: 5.46 ($546) (On Margin); 44.33 (Cash Secured)
Break Even: 44.33 relative to 50.69 Spot
Max Profit: 1.67 ($167)
ROC %-Age as a Function of Buying Power Effect: 30.5% (on margin); 3.8% (cash secured)
As you can see by looking over the metrics, there are various advantages to each setup.
With the long call diagonal, the ROC %-age stands out as its positive attribute, but the break even is basically at or near where the underlying is currently trading.
With the covered call, the buying power effect relative to the long call diagonal is a bummer, but you start out with a break even below where the underlying is currently trading. The max profit potential of the covered call relative to that of the long call diagonal is comparable, but the ROC %-age in the covered call is lower due to the higher buying power effect, particularly in a cash secured environment like an IRA, where the long call diagonal would be far more buying power efficient. There may, however, be some small advantage to being in the stock: KRE pays a dividend, but it's only quarterly, so it would conceivably pay a distribution in March (the next distribution) and June. The last distribution was .4058 (i.e., $40.58 per one lot), so we're not talking hugely motivating money here.
With the short put, your break even is more than $6 below where the underlying is currently trading, but the max profit potential isn't great relative to those of the covered call or long call diagonal. That being said, the ROC %-age at max is comparable to that of the long call diagonal.
* -- I classify covered calls and "synthetic covered calls" like long call diagonals as "neutral to bullish" assumption setups due to the ability to reduce cost basis over time via roll of the short call aspect so that you could conceivably make money if the underlying moves sideways.
You decide - SVB Financial collapse - who is to blame?A lot of talk on who is to blame for the SVB Financial collapse – this is the first big casualty of rapid rate hikes and tighter policy, but who is to blame and what are the next steps?
-SVBs management – they invested short-term deposits in longer term fixed income assets – where a large % of its $120b securities portfolio lacked any kind of interest rate hedge (payers swaps were clearly needed)
-SVBs management – In the past 8 months SVB had no risk manager - fortune.com - no one knows how they efficiently managed risk
-SVBs management – the accounts showed they held $91b of its $120b securities in its HTM (assets Held to Maturity) book – these are assets they intend to hold until maturity but the accounting rules detail, that they don’t need to mark-to-market the moves in the underlying and report the ballooning losses – which again were not hedged.
-SVB deposit mix - 93%+ were above the FDIC insurance limit – this makes depositors v sensitive to any capital concerns at the bank
-SVB deposit mix - VCs had a rapid cash burn, as projects they back are typically driven by changes in interest rates (think Net Present value and Internal rates of return) – depositors took cash off SVB’s balance sheet to fund operations – SVB subsequently had to sell assets as their liabilities fell – we then see realised losses from buying securities at much higher prices.
-Short sellers/investor base – shorts had an eye on unrealised losses from the worsening asset quality for weeks – the selling accelerated when the CEO/CFO/CMO disclosed they’d sold a chunk of stock on 27 March – it was over when the SVB took a $1.8b hit on its AFS securities available for sale on Wednesday – management sold $21b of its $28b book and announced a $2.25b in equity/debt raising - investors knew with conviction that depositors were fleeing – who supports a raising when liabilities are falling – no one sensible, raising pulled
-The Fed - failing to know such a shift in rates would impact banks asset quality when its primary function is financial stability.
-Regulation - Basel 3 - banks being forced to buy govt paper against deposits - v low risk weighting (perhaps required a hedge
Hard to pinpoint this on one aspect IMO - I think there is a perfect storm going on – a lack of hedging of interest rate risk was clearly a dominant factor behind this. Top down this is a function of rapidly tightening monetary policy and the impact this had on both the asset quality and liability side of the balance sheet – we should recall SVBs model is not the same as others in the banking space, so its hard to say this is systemic – still we wait for the outcome on next steps on how deposits over $250k will be dealt with – we’re hearing they may get 50% back initially but a buyer would be the best solution
The issue for regional/smaller banks comes if is we see some sort of haircut on the deposits claim over $250k – that could see a loss of confidence in holding deposits with other smaller banks names – we shall hear more soon, but broad contagion through the financial system seems unlikely, but it is a possibility given nearly 1/3 deposits in the banking system are uninsured – any bank with a large asset base and low equity are in the spotlight
As said Friday this could be a nothing burger or have real impactions on economics - the big issue happens this week if we see no clarity on how depositors are dealt (seems unlikely) with and we get a hot CPI print
KRE to test POC , then lowerKRE looks as if it will test 62.78 at the point of control, then reverse and head lower in the reversion channel.
...But ...I was told the markets will crash nowWhy are regional banks breaking out to new 6 months highs relative to the S&P? Does smart money know something that retailers are missing?
KRE - Regional Bank SpankWither the Banking Sector... by design.
All part of the Plan.
Larger Regional Banks will become the very next too-big-to-fail entities.
A good old-fashioned rollup, kinda like Bush Sr's criminal S&L Scandal Part tres.
_____________________________________________________________________
Bank on it.
A threat to financial stability?
M&A isn't going to go all too smoothly.
