I posted the following meme in the comment section under one of Friday’s posts & it looks the grim reaper certainly did come a-knockin’ & Credit Suisse opened the door with the stock trading down 23% in pre-market as one of the TBTF global banks accelerates its path on the road to penny-stockville (CS now trading below 2.00 per share).
Credit Suisse next
CS daily March 15th
As I’ve stated in recent videos, last week’s failures of Silicone Valley Bank & Signature Bank we’re simply continued cracks in the financial system that started with crypto-related firms & has since spilled over into the banking system, as too many financial institutions had their hands elbow-deep in the cookie (crypto) jar along with what amounts to near-criminal negligence for failing to properly manage interest rate risk on their Treasury holdings, bonds that just a year or two ago had a near-zero chance of upside potential in value and a near-100% chance of downside (before maturity) due to the fact interest rates had nowhere to go but up.
So here we are & yes, the US & European central banks will (once again) step in to take drastic measures to shore up the banking systems but let’s not forget that after missing the opportunity to bring rates back to normal levels for the past 15 years, a move which would have giving the central banks some more dry powder in the next crisis, they opted to stick with near-zero rates instead, creating the very mess the financial system finds itself in today. As such, they have a lot fewer arrows in their quiver than they did back in 2008.
Anywho, the charts are the charts & as of now, the bull trap/false breakout scenario on the US major stock indices (breakout above the primary downtrend line + 200-day MAs & recent subsequent failure/move back down below) remains in play. The S&P 500 and Nasdaq 100 still need to take out Monday’s lows to increase the odds the bull trap scenario will stick & I would be surprised shocked not to see the Fed and/or ECB come in to prop up the market with guns blazing soon so at the very least, expect some sharp swings in the market this week and next.
Sticking with my swing shorts for now, willing to ride out any Fed-induced shenanigan’s until & unless the charts convince me otherwise. Today & the remainder of this week has the potential to either solidify or foil the bull trap/false breakout scenarios so stay nimble or stand-aside in cash if volatility isn’t your cup of tea.