Traders in New York and elsewhere are waking up Thursday to reports that the offices of Deutsche Bank AG (DB) were searched Thursday morning by police and prosecutors seeking evidence in connection with alleged money laundering and helping clients create offshore entities in tax havens, according to media reports.
Everyone in the U.S. has been doing continuing education classes on money laundering since Bank of New York Mellon (BK) and its famous case in the 1990s. Greed makes some people cross the line. More continuing ed? Ugh. Let's put aside the news for now and check out the charts and indicators of DB.
In the daily bar chart of DB, below, we show the price action through Monday's close but indications are for DB to open maybe 4% lower Thursday morning. Keeping that in mind we can see that DB is still in a downtrend and still below the declining 50-day simple moving average line and the bearish 200-day moving average line. The volume pattern looks like trading has been heavier since June but a conclusion is hard to reach.
The daily On-Balance-Volume (OBV) line shows weakness from December with a low in late June and just a modest improvement to the end of September. Prices have made lower lows this month but the OBV has not. This is a small divergence and probably not meaningful.
In the lower panel is the 12-day price momentum indicator, which shows equal lows in October and November when prices made lower lows. This is a bullish divergence but also probably not meaningful, in my opinion.
In the four-year weekly bar chart of DB, below, we can see a long fall from grace. Prices have been below the declining 40-week moving average line all year. The weekly OBV line shows a long decline, too.
In the bottom panel is the 12-week price momentum study. We can see a higher low in readings from April to November. This is a bullish divergence when compared to prices that made lower lows. Will it help?
In this long-term weekly Point and Figure chart of DB, below, we can see a large distribution pattern from 2016 to 2018. The computer program shows that DB has reached a downside price target but the pattern looks bearish and lower lows should be expected, in my view.
Bottom-line strategy: The charts and indicators on DB are giving us no hint of accumulation or base building. I know some traders like to buy weakness and buy when the news is terrible but that is not my style. DB could make a large percentage bounce at anytime but again I like my odds with the Mega Millions better than buying a stock in a prolonged downtrend.
