Hello friends.
The 'Banking Crisis' is over. It's really been over since around the end of March, but now it's completely and utterly over as of this week because global search trends for 'Bank Run' have reverted all the way back into the normal range. Panic is gone. Since panic is gone, bank runs are gone. Bank runs only work when people are panicked, and people are objectively not panicked. At least, not depositors. Investors are still a bit spooked, as evidenced by the move in the regional banking sector ETF from 65 to 40 in relatively short order. They don't seem to realize that the banks are fine.
Our trading idea would be to long KRE at the bottom (not quite reached, we think it bottoms a bit lower), and ride it up back to at least $50. We think these types of crises also create very special investing opportunities due to the nature of fear, so we bought up shares in NEWT since we think it was beaten down by indiscriminate selling due to having a bank license even though it actually isn't even a bank on paper, and has a really low risk of a bank run due to the fact that the vast majority of depositors have below 250k in their bank segment. That play is more complicated, which may be why the market is mispricing it so egregiously. We think this is a massive opportunity to buy the stock and hold it for the next year or two. For a shorter-term play though, we would do something like buy month-to-expiration calls on KRE once it ticks down a little more. Either one can work well.
The 'Banking Crisis' is over. It's really been over since around the end of March, but now it's completely and utterly over as of this week because global search trends for 'Bank Run' have reverted all the way back into the normal range. Panic is gone. Since panic is gone, bank runs are gone. Bank runs only work when people are panicked, and people are objectively not panicked. At least, not depositors. Investors are still a bit spooked, as evidenced by the move in the regional banking sector ETF from 65 to 40 in relatively short order. They don't seem to realize that the banks are fine.
Our trading idea would be to long KRE at the bottom (not quite reached, we think it bottoms a bit lower), and ride it up back to at least $50. We think these types of crises also create very special investing opportunities due to the nature of fear, so we bought up shares in NEWT since we think it was beaten down by indiscriminate selling due to having a bank license even though it actually isn't even a bank on paper, and has a really low risk of a bank run due to the fact that the vast majority of depositors have below 250k in their bank segment. That play is more complicated, which may be why the market is mispricing it so egregiously. We think this is a massive opportunity to buy the stock and hold it for the next year or two. For a shorter-term play though, we would do something like buy month-to-expiration calls on KRE once it ticks down a little more. Either one can work well.
Note
I wanted to line up the Bank run search trends with the KRE price but it somehow didn't work. Just know (relatively obvious but maybe useful for beginners) that the search volume peaks right around the massive crash, since the massive crash mainly originates from all that panic.Note
Bottom is here, we bought a lot of sharesNote
Our confidence in this trade is extremely high. It's our biggest position now.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.