I hoped 2008 and 2009 would mark the only time in my career that family, friends and clients would call asking if their deposits or investments were safe at this bank or that bank. Suffice it to say front-page headlines regarding the seizure of SVB Financial Group's (SIVB) Silicon Valley Bank and Signature Bank (SBNY) sent shockwaves through Wall Street and Main Street, and my phone rang off the hook on Monday.
Friends called because they had money at Zions (ZION) , First Republic Bank (FRC) , Western Alliance (WAL) and Comerica (CMA) . Some even owned stock in these banks.
As you'd assume, the primary concern was that the banks would padlock the doors and their deposits would vanish into thin air. Even though depositors were bailed out at SIVB and SBNY, there's a powerful sentiment spreading like a virus that more banks are likely in the same trouble and there's no way the government can backstop all of them.
I don't want to debate the power of the Federal Deposit Insurance Corp. (FDIC), but if you're over the $250,000 FDIC limit, a simple conversation with your banker or broker regarding the purchase and future rollover of one-, two- or three-month Treasury Bills is worthwhile. You'll gain additional protection, collect a little interest and, most importantly, you'll likely sleep more soundly.
Turning to the charts, while I don't want to sound like a snarky trader, it's fun to note that, to the best of my knowledge, no bank has failed or been seized while trading in a bullish uptrend. This isn't to say that it was easy to see these failures coming because it wasn't. However, maybe noting that bad things tend to happen beneath the 200-day simple moving average (SMA) is a lesson worth remembering for investors with a limited knowledge of technicals.
Regarding the major indexes, we can talk about potential support around $170 on the iShares Russell 2000 ETF (IWM) or that the Invesco QQQ Trust (QQQ) closed back above its 200-day SMA. Still, we all know this morning's regular session trading will be dictated, at least initially, by the latest Consumer Price Index (CPI) inflation data.
If CPI data send stocks lower here on Tuesday morning, I'm interested in looking for a bounce on the SPDR S&P 500 ETF (SPY) toward $378 and the IWM near $170. But in both cases, I'll likely remain on the sidelines until price recaptures the session's volume-weighted average price (VWAP).
If you want more reason to consider the potential for an oversold bounce, the percentage of stocks trading above their 40-day moving average is back near 17. I typically view anything over 70 as approaching overbought and under 20 as approaching oversold. While the market doesn't appear to be oversold, we are definitely headed in the right direction for a near-term bounce.
