There’s a lovely English figure of speech which suggests the ridiculousness of something happening: “when pigs fly.”  In German, the same sentiment can be expressed by the expression “ich glaub mein Schwein pfeift” which means “I believe my pig whistles.”  DB is surely trying, but it’s having a hell of a time whistling a happy tune.

We last visited the stock on March 13 [see: When Push Comes to Shove] when it was threatening to break out of a small consolidating triangle after breaking down below our previous short signal at 11.  From the Mar 13 post:

A breakdown from a falling channel is incredibly bearish, but a move back above the bottom of the falling channel (around 9.50) would be net positive. To get there, it will need to break above the red TL and will then face its SMA200, now at 10.32.

A long position with very tight stops would make sense for those willing to roll the dice. However, if it can’t retake the channel bottom, then it remains a dead bank walking and a good short.Obviously, shorting it in the hopes that the ECB lets it fail would entail some risk. No doubt the ECB is trying to figure out a way to restructure it in such a way that it’ll survive and, ideally, not take the rest of the world down with it. Until then, I think it’ll remain on life support.

As it turned out, the triangle broke down and not up.  The stock spent 6 weeks being propped up around $8/share before finally breaking down again and shedding 28% in a nifty little falling channel.

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It finally bottomed at 6.49 in June and bounced back up above 8 where it collided with overhead resistance and is currently backing off in the wake of the latest restructuring news.

Make no mistake about it, DB is in a world of hurt.  Given that it’s the 15th largest bank in the world with over $40 trillion in derivatives, its demise could devastate the financial system.  Can this pig whistle?  If so, is it just whistling past the graveyard?

continued for members…

Let’s start with the weekly chart which illustrates the sad long-term reality facing DB: a breakdown from a falling channel.Despite many opportunities, the stock hasn’t even been able to backtest its SMA200 since breaking below it on Feb 2, 2018.

The daily chart is a little more positive than the 60-min and its purple TL from Feb 28, 2019.  The red channel from Jan 24, 2018 looks to have been broken, with only the SMA200 (currently at 8.76) standing between it and a backtest of the broken white channel (9.32ish.)

DB might well have the help it needs to get back above the SMA200 and reach the white channel bottom.  If so, I’d be fine going long again.  But, the chart is littered with too many failed attempts to retake the SMA100 for me to get excited about getting long now.

The safer play is to remain short, with tight stops, as long as it remains below 8. Even if it breaks back above, I’d keep those shorts nice and tight.

Now, on to the rest of the charts…

10Y notes seem to be finding their feet here with rates just barely above 2%. Though CL and RB remain stuck in falling channels — even if close enough to easily “break out” when necessary.

The US dollar is getting a little bounce……with most of the potential stock-boosting action resting in USDJPY — which, as we discussed last week, has broken out of its latest falling channel. This leaves ES at a loss in a very ugly chart — rising despite breaking down.So far, it has managed to avoid a lower low. And, its SMA10 keeps climbing.  But, it looks iffy.

SPX’s H&S Pattern was obviously busted, and there’s still a clear path to 3047.34.  But, that’s not the same as a guarantee it will keep climbing.If it does, it will likely be with the continuing assistance of VIX, USDJPY and CL.If it doesn’t, it’ll be because enough investors lose faith in the ability of central banks to avert the various catastrophes waiting in the wings.

More later.

UPDATE:  10:15 AM

A fairly typical bounce motivated solely by the little TL connecting ES’ recent bottoms.  Note that it’s parallel to the TL connecting the Jun 12 and Jun 26 lows.The usual culprits are mostly retreating from their 10am boost levels.Quick update on AAPL and BA’s downside potential.  BA is holding on to a channel bottom.

While AAPL has broken below its SMA60 200.