Page menu

Saturday, March 25, 2023

Weekly wrap-up Financials, Zombie Banks, Tech, China, and a CME

There's a lot to cover after last week, but I have a much better handle on things than I did on Thursday, following what looked like a panic close....

 See: The FOMC fallout in forex markets & the Crypto Crackdown - full story

Despite all the negative headlines, stocks actually ended higher (for the week). 

Friday's Action 

We didn't get the short squeeze I was looking for, but I did get the direction right. 

 Market futures looked pretty dire at the time I made that prediction, but the market still managed to eek out a pretty nice gain - 50 handles on the $SPX - (off the lows of the session). 

Off topic: 

I follow space weather, because a CME has the potential to wipe out way more than just the stock market - and this week's Solar Storm put on quite a show! 

Huge ‘doomsday’ blast from sun this week could have killed Earth’s internet

Strongest solar storm in nearly 6 years slams into Earth catching forecasters by surprise

I retweeted this CME alert on the 23rd, because I could see it was massive, and if I see another massive CME pop up on my radar, I may send out an alert in the news letter, because that could be a catastrophic event, as much as we rely on technology! 

Speaking of Technology

Stocks actually ended up for the week, but I have to attribute that to 1st quarter window dressing. The best performing sector was tech, and of course China. Remember this is what led the rally - in Oct. - and tech out-performed in the 1st quarter.  

Window Dressing 

As we trade into the end of the First Quarter, any fund manager not fully invested in a leading sector, risks losing his, or her, job. We call this phenomenon, "being forced to chase performance". It's also called window dressing.    

Side note: $AAPL Apple Here's something funny. 

Just for kicks, I put a trend line on Apple, and tweeted it on Thursday 

Then Yesterday Friday, I see Carter Worth on Fast Money, covering Apple.  

If you happened to catch that, maybe you can tell me if he was bullish or bearish, because it just seemed wishy-washy as all get out. But I digress.  

What Next? 

If I'm correct, then we're about to see a run for the exits, as most brokerage houses have already closed their books on the Quarter. I call this phenomenon, "window dressing - going up in flames".  

Financials and Banks

As I said earlier in the week, this market reminds me of '08, when financials led the crash, and I still follow financials closely, including all the major banks, and even several regional banks. 

The financial crisis didn't end in '08. 

The Zombie Banks are like the walking dead, and require regular injections (of money) in order to keep them alive. 

Anyone who believes otherwise, just either doesn't have a good chart, or a good memory. 

Many of these Regional Banks are skating on thin ice, but I think we've seen the worst for now. 

The plunge protection team even came out in support of the banking sector after Friday's close.

Breaking News after the closing bell on Friday - FSOC (Financial Stability Oversight Council) aka the plunge protection team 

U.S. Treasury says FSOC agreed banking system sound

Short term  

Financials trade into a bullish inverted Head & Shoulders pattern 

The $XLF didn't quite reach the (inverted) left shoulder target, so maybe we see another washout. 

This is obviously a super high risk trade, but this is how I roll!  

I don't like to rush into a trade like this, because the pattern is so obvious, to even the most unsophisticated investor, and no doubt many retail investors have already piled in. 

Watch for a Monday morning surprise, to shake them out. This has become the new normal; 
break key support, then back up the truck.

It's a crooked game. 

Speaking of ill gotten gains; Goldman Sachs is a name to watch, since they seem to be doing pretty well in the current environment. I call them, "government Sachs", because so many former GS work in the Treasury. I'm not sure why anyone would give up a high paying job in finance, to go work for the government, but who am I to judge?!   

26 Goldman Sachs Alumni Who Run the World (GS) investopedia


$GS Goldman Sachs trending higher 

Take Care, 

No comments:

Post a Comment