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Friday, March 31, 2023

Comparing Today's Financial Collapse to The Crash of '08

Is this a repeat of what we saw in late '07-'08.  It's too soon to say, but the similarities can't be ignored! 

Last year some people were claiming that the charts were reminiscent of the crash of 2000, and I debunked that. 

Comparing Today's Market To The Market Crashes of '08, & 2000

Today, I'm seeing something in the banking sector charts, that looks eerily similar to what we saw just ahead of the crash of 2008, and I suppose that's why I'm up at 2-3AM - most days - analyzing the action in Europe! More on that in a minute.  

$DJUSFN (Financials) Monthly Candlesticks - For those who missed the banking crisis of '08, this is the chart most of us used to track the financial collapse. The Dow Financials, or the $IYF (which is the corresponding ETF). Of course many traders like to use the $XLF, but I find it to be less accurate... 

What I want to draw your attention to on the chart below is the similarity of what we saw in late '07, and what we just saw in March 2023. Very similar timelines, and big red candle taking out support. 

Taking a closer look at how this take down was engineered

$BANK (Bank Index Nasdaq) - It looks like this collapse was planned for at least 10 months, and no doubt bearish Options were purchased during that time. This explains why the $VIX was mercilessly hammered - lower - during the same time frame. The lower the $VIX the; cheaper the Puts.    

If this was all timed according to the options market, that means we probably aren't going to see much upside until after April OPEX. 

It would be easy to figure out who coordinated this, just by looking at who was buying puts ahead of it, but don't hold your breath waiting for that investigation! 

Of course there will be good trading in this sector at some point, because every good crash deserves a snap-back rally, but unless you traded in '08, you may be better off avoiding this trade altogether.

I'd also stay alert to other sectors wh
ich may follow.... 

Seems to me, money panicked out of financials, and investors rushed in to buy tech, oil, gold, and even bitcoin. 

By the way, I recently raised my target on Bitcoin, just before we saw another higher high, on Thursday.

 Take Care, 

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