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Are The Lows In Place?

ByChris Kimble
Published 04/17/2020, 01:22 PM
Updated 07/09/2023, 06:31 AM

Is our banking system about to send us one of the most important messages in the last two decades?

Joe Friday says,”Absolutely yes!”

The top chart looks at the KBW Bank over the past 25 years. The 60-65 price zone is represented by line (1).

When line (1) held as support in 1998, 2002 and 2012, banks and the S&P both bottomed together and experienced very strong rallies for years to come.

When support line (1) broke in 2008, banks fell an additional 60%+ and the S&P fell 30%+.

Joe Friday Just The Facts Ma’am

Joe humbly does not know if line (1) will hold.

What does Joe know?

If this support line holds at (4), similar to 1998, 2002 and 2016, the odds are high the lows for banks and the S&P are in play and maybe the worst of the virus news is behind us.

If support at (4) is broken by the banking index, look for banks and the S&P to trade much lower in the future.

Are we headed towards an economic depression or has the majority been fooled and the lows are already in play?

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Latest comments

The lows?  If you're still wondering if we'll re-test the lows, you need to close the computer and go away.  You're going to hit new highs by the fall.  Yes, NEW HIGHS.  The panic is over folks.  Now, you have to buy something of high quality and walk away.  Re-test?  Please.
You missed the point of his series.  Commodities have diverged from equities starting in 2011.  Bank diverged in 2016.  Oil just hit negative on May futures.  What other warning signal do you need to realize that this divergence can't continue?  I believe it is very reasonable to expect a retest at the least.  Unlimited QE does not mean sustainable new highs.  Yes, cash is flocking to equities, but these are warning signs that equities are overextended, and they have been since at least 2016.
No. This has not even started yet.
I agree that the worst is over and also the threat of economic breakdown is a bit exaggerated. It's a zero sum game after all. Still let's not get complacent and create a false security that will only lead to a second wave with the virus dishing out a further lesson in compound interest to markets, traders and politicians alike
a completely artificial market
what price is level 4 cant see it
I'm sure they could continue pumping money but that could create a moral hazard with record number of people out of work, apparently the Fed has contious too. I still have a job though.
We need in-depth analysis what fed is purchasing; bonds, treasuries, t-bills, bond eETFs, overnight lending(repo) and stocks, yea stocks such as Tesla. How often, how much they spend daily, when they plan to stop or reduce such purchases or resume them.
It's all about the Fed. As of Friday 17th they backed off from purchasing treasuries and will reduce ETF bond buying, yea they buy ETFs. Expect markets to start downward trajectory. Fed is most likely buying Tesla stocks as well, this company hasn't made a dime of profit since inception. FYI: fed reduced its repo operations on Feb 14th then market started its downward trajectory, virus news were already a month old. Fed is the only market-moving force force.
Technicals are irrelevant at this point. All these charts and numbers are outliers.
Chris Kumble..... what do you think?
Too early
What's the value of technical analysis if the markets are going up based on outside fed monetary intervention pumping money into the market? The charts are not reflecting the investors sentiments. Only relevant question is when the fed will stop pumping the money cause no matter technicals analysis from that point markets will go down.
Yeah, this Chris guy ain't so smart......
They reduced bond ETF buying as of Friday and backed off from treasuries buying.
I think the lows are already in play
Spot on again with the levels. KBW is a good leading indicator along with IWM.
Great post!  We won't know if the support line will hold, but a second test of that line is sure on the way in the coming weeks.
Please tell me the symbol for pulling up the chart. Thank you!
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