"Definitely" Don't Buy Bank Stocks On 22 Mar 2023. Not Yet !
US 3 composite indexes - Past 5 days performances
US market heaved a sigh of relief ytd - Tue (21 Mar 2023) as “confidence” seemed to have returned as news surrounding the incumbent few banks began to settle in.
Looking at the 3 US composite indexes (graph) above, it’s been on the upswing since last Wed (15 Mar 2023).
Incidentally it was exactly one week ago when the Silicon Vally Bank debacle first reared its ugly head (08 Mar 2023).
In a short span of 2 weeks, so many disruptions have happened in the banking industry.
$Signature Bank(SBNY)$ selective assets “sold” to winning bidder $New York Community(NYCB)$
Silicon Valley Bank under FDIC receivership as the search for a knight in shining armour continues
$First Republic Bank(FRC)$ still deciding what other action/s to undertake to further strengthen itself; with a $30 Billion capital “lifeline” support from the “big brothers” group of bigger US banks.
Still US Market Yesterday’s Performance Has Been Credible :
DJIA : +0.99% (+316.02 to 32,560.60).
S&P 500 : +1.30% (+51.30 to 4,002.87).
Nasdaq : +1.58% (+184.57 to 11,869.11). Best performer but still not quite there yet.
With a few hours before US market opens for Wed (22 Mar 2023) trading, its three pre-market indexes are “flat” and lacklustre.
Everyone knows why the market is “flat” and might remain as such; until 2pm (US time).
That is when Fed’s chairman - Mr Jerome Powell will announce FOMC’s decision (Mar 2023).
Coming back to Tiger’s daily discussion topic of “How To Profit From A Banking Crisis ?”
I would say today would NOT be the time to do so. WHY ?
(1) You Have “Missed” The Boat.
If you have come across my 15 Mar 2023 post - Bank stocks still a buy ? Moody downgrades banks.
Had you taken a leap of faith based on Mr Warren Buffet’s mantra of “… be greedy when others are fearful” you would have been right in the “eye of the storm” and bought the bank stocks at a steal.
JP Morgan - 15 Mar to 21 Mar
Citibank - 15 Mar to 21 Mar
Morgan Stanley - 15 Mar to 21 Mar
Looking at the 3 “bigger” US banks’ past 5 trading days performances.
The stocks have recovered most of their recent “losses”. In fact $Morgan Stanley(MS)$ even had a small gain of +2.14% for its past 5 days’ performances.
(2) Today Is Sit-Out Day. Too Risky To Jump In, Especially In The Morning.
Referring to FOMC’s 8 most recent meetings, the day when Mr Powell announced the next interest hike; US market have been erratic and on some of the occasions “volatile” - to say the least.
It is likely that today will be no different.
To trade (buy or sell) in stocks when the market is unsure - will be “risky”, agree ?
Instead of being consumed by FOMO, try to stay level-headed and keep a close watch. Strike only if the stock’s price meets your buy-threshold.
There will always be opportunity; just be patient.
If Morgan Stanley’s Chief Investment officer Mike Wilson’s analysis is accurate, the next buy-opportunity is not today; not just yet.
Do you think today will be the day to buy Bank stock ?
Do you think Mr Mike Wilson’s warning is valid and warranted ?
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