Deutsche Bank: On the Ropes

In Sep 2016, a hedge fund client asked for my take on Deutsche Bank [DB.] The stock had broken down and fallen 33% in three months. Priced at around 11.23, they were considering shorting it.

A few hours later, it became apparent to me that DB was not only not a good short, but was a strong buy. Somewhat skeptical, they thanked me and authorized the publishing of my work on our website [see: Deutsche Bank: Will it Survive?]

Deutsche Bank: Charting Bliss

As it turned out, DB bottomed out two days later at 11.19 and began a very nice bounce, tagging successive upside targets over the next four months. [see: Deutsche Bank: Another Pause or More?] At that point, it seemed vulnerable to me. I set some downside targets and pretty much forgot about it for a while. My client had lost interest, and I was on to more interesting issues.

It was probably just as well, because after reaching our 20.43 upside target DB entered an extended period of chop, gaining and losing 20% over and over again.

My interest was piqued again in the midst of the market meltdown this past February. With $40 trillion in derivatives (in 100 euro banknotes laid end-to-end, it would nearly reach Mars), I wondered how Deutsche was faring. With the stock at 16.13, I posted three downside targets of 14.91, 14.72 and 12.30 [see: What is Deutsche Bank Trying to Tell Us?]

And, if things go badly after Apr 3, then the red channel would break down and open the door to 12.30 – another 24% drop from current levels.

Yesterday, DB reached the lowest of the three, capping off a tidy 150% return over the past 20 months and again raising the question: will Deutsche Bank survive?

continued for members…