Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Stocks Bear Market and Financial Crisis Not Over, US Regional Banks The Next to Go

Stock-Markets / Stocks Bear Market Jun 25, 2009 - 12:49 PM GMT

By: Garry_Abeshouse

Stock-Markets

Best Financial Markets Analysis ArticleIt is consistent in major bear markets that follow through to the end, for the stocks in sectors showing the most weakness to fall between 80% and 90% from their highs.


In the USA Regional Banks (the smallest and the weakest links in in banking sector) together with anything to do with Housing and Real Estate, general Insurance and RE Insurance companies - would be some of the weakest links in the USA's financial morass.

Below taken from: http://www.marketoracle.co.uk/Article11551.html :

"The 20 biggest banks in the country control $3.5 trillion of the $7.1 trillion deposits in the country. There are 8,400 banks in the country and 20 banks control 50% of the deposits. The list below reads like a who’s who list of the worst run banks in history that took the greatest risks and lost the most money.

The total credit card debt outstanding in the U.S. at the end of 2008 was $960 billion. The top 15 credit card issuers hold $793 billion of this credit card debt, or 83% of all the debt. They also hold a major portion of auto loans, home equity loans and personal loans."

"There are currently $15 trillion of mortgage loans outstanding in the U.S. You may be surprised to learn that the biggest banks in the U.S. hold the majority of the mortgages in the country. These banks issued the subprime and Alt-A toxic mortgages that brought the financial system to the brink of collapse. There is no doubt after examining these figures that the mega-banks control the country’s financial system. Ben Bernanke, Hank Paulson, and Tim Geithner have decided that these banks need to be saved at the expense of senior citizens and the American taxpayer."

This means that the smallest 8380 of the US banks control 50% of the deposits in the USA, which means that each of these banks have on average only 0.006% of US deposits each. Each a flea on the backside of a giant.

How many of these banks will the USA allow to close their doors before panic sets in? And what about the 8,000 credit unions in the USA?

The following eight charts are longer term studies from the banking, insurance and housing sectors. Earlier charts sent out were shorter term studies.
After the recent rally of approx. between 30% and 40% in the indexes, all the charts below paint a similar picture of intact downtrends going back many years.

The fact that after the recent strong rise, these downtrends are ALL still intact, significantly strengthens the case for a continuation of the bear market, following any significant move down from current levels.

The bearish patterns on the shorter term charts, if fully confirmed by a downside break, will certainly weaken, if not destroy, the bullish case so predominant in financial circles at the moment.

There is certainly no case yet that the market has seen the lows, this will have to be proven by future market action.

The most important chart of the bunch though, would have to be the Nasdaq Banking Index, representing the top end of the baking sector. This chart paints a most disturbing picture of the bear market so far, together with its portents of more bad news to come.

Note that Berkshire Hathaway is the largest reinsurer in the USA and has just increased its holding in Wells Fargo, also shown.

You can see the price of Wells Fargo has risen from $8 to $28, and looks uncomfortably high on the chart.

Wells Fargo was the top originator of mortgage loans for 2008 (not a good year for US mortgages at valuations well above current prices), and is the 4th largest deposit holder and the 7th largest issuer of Credit cards in the USA.

I would say the pull back here in US equities, and thus ours as well, will not be a strong one - just strong enough to prolong the agony before the next leg down.

I would expect the next leg down to occur some time between now and mid January, 2010, with the highest probability that it will happen before the end of October, 2009.

That would make it exactly 80 years almost to the day, after the 1929 crash.

Garry Abeshouse
Technical Analyst.
Sydney
Australia

garrya@bigpond.net.au

I have been practicing Technical Analysis since 1969, learning the hard way during the Australian Mining Boom. I was Head Chartist with Bain & Co, (now Deutsch Bank)in the mid 1970's and am now working freelance. I am currently writing a series of articles for the international "Your Trading Edge" magazine entitled "Market Cycles and Technical Analysis".

I have always specialised in medium to long term market strategies and after discovering the excellent Point & Figure Charts from Stockcharts.com in mid 2008, have concentrated on this style of charting ever since.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Dave
28 Jun 09, 09:48
Bank closures and a nation wide "bank holiday"

I have quit the banks and am using a city credit union.Is it safe to assume that if a 1930s style bank holiday is declared that Credit Unions would be included? Some of those banks never reopened.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules