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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
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* In answer to this often-asked question, please be advised that I do not post articles from other writers on my site.
* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...please read my full Disclaimer at this link.


* If the dots don't connect, gather more dots until they do...or, just follow the $$$...





* Wed. July 31 @ 2:00 pm ET - FOMC Rate Announcement + Forecasts and @ 2:30 pm ET - Fed Chair Press Conference
* Wed. Sept. 18 @ 2:00 pm ET - FOMC Rate Announcement + Forecasts and @ 2:30 pm ET - Fed Chair Press Conference
* Thurs. Nov. 7 @ 2:00 pm ET - FOMC Rate Announcement + Forecasts and @ 2:30 pm ET - Fed Chair Press Conference
* Wed. Dec. 18 @ 2:00 pm ET - FOMC Rate Announcement + Forecasts and @ 2:30 pm ET - Fed Chair Press Conference

*** CLICK HERE for link to Economic Calendars for all upcoming events.

Saturday, April 10, 2021

US BANKS: Parabolic Blow-off Top Coming?

Can US taxpayers afford to fund another government bailout of the US Banking Sector, if we see a catastrophic blow-off occur at the top of their respective parabolic spikes, especially...

  • in the wake of the Biden administration's spending spree, to date, together with their monumental proposals of rebuilding or "re-imagining" America, post-COVID-19 pandemic, at a cost of $Trillions more (e.g., the "Green New Deal"),
  • if negative consequences occur after Biden's proposed tax hikes are passed by Congress,
  • as taxpayers try to cope with the rapidly-escalating costs associated with the unprecedented influx of hundreds of thousands of illegal immigrants flooding across the southern border each month (many of whom have COVID), as well as drug cartels and drugs, gangs, sexual predators, terrorists, and human traffickers, that began post-Biden election and is now described as a humanitarian crisis, a national health crisis, and a national security crisis by border agents, Governors, mayors, and sheriffs of bordering states and towns, as well as members of Congress...attributable to Biden's new border and ICE policies. It's being completely ignored by the President and Vice-President (VP Harris was put in charge of this issue by Biden), and neither one has even bothered to visit the border and speak to these front-line experts about this catastrophe,
  • etc., etc., etc.

The National Debt is already over $28 Trillion, and rising fast, especially with President Biden's out-of-control spending agenda, costing trillions of additional dollars.

I can't predict the timing of such an event, or identify it catalyst, but I think we'll see another catastrophic blow-off top happen in the banking sector in the not-too-distant future...judging by the steepness of, and rabidness associated with, the current parabolic spikes. The risk is there..."caveat emptor." 

Of note, these three global threats are bubbling in the background and may produce major fireworks sooner than we think. How will Joe Biden respond...indeed?


The following charts show that the rapid increases in the price of these bank ETFs and stocks formed during the full throes of the pandemic, from March 2020 (when the economy, jobs, healthcare, personal spending, etc., tanked, and hundreds of thousands of people died from the virus and other health problems resulting from mass lockdowns across the country and around the world). 

Time will tell whether these parabolic price rises were attributable to sound judgement based on assumptions of a quick, sustainable economic rebound, or whether it was shaky speculative investing based on an overestimation of a rapid recovery...e.g., did they invest heavily in Bitcoin (check out the parabolic increase from March 16, 2020 to the high in March of this year..."The Emperor wears no clothes!").

BTC/USD monthly

KRE monthly

XLF monthly

JPM monthly

GS monthly

The following monthly chart of the S&P 500 Index (SPX) contains the SPX:VIX ratio in histogram format at the bottom. 

Typically, over the past four years, when the price on this ratio reached its current level, the SPX, either paused and consolidated, or pulled back...sometimes dramatically.

Furthermore, the SPX has spiked far above the +5 standard deviation of the long-term uptrending regression channel...a sign of extreme equity frothiness.

Keep an eye on this ratio for clues as to strength or weakness in the SPX in the coming weeks.

SPX + SPX:VIX Ratio monthly

SPX monthly

In the meantime, I expect volatility to increase, as FOMO (fear of missing out) traders spike prices even higher, before we see any kind of substantial pullback or parabolic plunge.

Stay tuned, as the US Federal Reserve and Biden's administration continue bloating markets, the federal deficit, and, ultimately, inflation (keep an eye on the 10-Year Treasury Yield in this regard, as described in my latest post).

It's also worth tracking market action in the MSCI World Index, Japan's Nikkei Index, and the FNGU ETF, as outlined in my recent posts here, here and here, for evidence of global equity weakening.

* UPDATE April 20...

ALERT: Price is now sitting on the neckline of a bearish Head & Shoulders formation on the daily chart of KRE today...and just above support on the monthly chart, as shown below. We'll see what holds and what breaks in the coming days/weeks...but, it's currently at a critical level.

Any drop and hold below its current level could be swift, accompanied by some major overall equity market volatility...keep an eye on the SPX:VIX Ratio, as outlined in my latest post today for clues on market direction.

* UPDATE April 28...

The U.S. Federal Reserve may not be concerned about inflation (or the National Debt), as confirmed in today's latest press release (following their monetary policy meeting), but 87% of Americans are...the Fed continues to live in a fantasy world of its own, unshaped by reality, that is supportive of bloated stock markets, federal deficit and inflation, as described above.

Meanwhile, supply chains are imploding...

"Froth," indeed...

Source: ZeroHedge.com


It looks like the Fed is getting nervous...read more here.

* UPDATE May 10...

Hyperinflation is looming...

Source: ZeroHedge.com

May 17 

May 17

* UPDATE May 17 (1:42 am ET)...

BITCOIN continues its freefall...after it topped out on May 14 at 64,374.

N.B. Further BITCOIN updates can be found here.

"The Emperor wears no clothes!"

Somebody finally noticed. 😏

* UPDATE July 23, 2022...

The XLF (et al) blowoff began in January, as shown on the following monthly chart.

Near-term suppport sits at 24.00...long-term support lies at 16.00...with 20.00 serving as a median/pivot-support level.

Price has had difficulty remaining above 20.00 since 1999, so, we'll see what happens this time. A sustained breach of this level could be catastrophic for the U.S. banking system and equity markets.

N.B. Read further IMPORTANT DETAILS on banks here.