pebblewriter

Tag: Deutsche Bank

  • Deutsche Bank: Kann Dieses Schwein Pfeifen?

    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.

     * * *
    Deutsche Bank has been a terrific source of trading ideas which have paid off nicely
    over the years.  While the stock has lost 32% since our initial forecast in Sep 2016, our
    long and short trade ideas have totaled 237%. CLICK HERE for forecasts and results.

     * * *

    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?

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  • Deutsche Bank: End of the Road?

    I first began focusing on DB in September 2016, when a consulting client asked me to opine as to whether the stock was circling the drain or represented a buying opportunity.  In our original post [see: Deutsche Bank, Will it Survive?] I concluded that a huge falling channel dating back to 1997 made it a buy at 11.23.

    DB bounced 90% at 11.19, and has since become a favorite trading vehicle of mine — bobbing and weaving predictably enough to have produced some excellent returns over the past two years.

    In our last post to focus on DB [Deutsche Bank: On the Ropes] we noted DB had reached channel support which, if broken, would suggest downside to 10.30 (another test of the huge white channel.)

    DB reached 10.29 on Jun 27, then reversed and nailed our upside target at 13.06.  From July 25’s CIW…

    Had the rising purple channel held, 14.72 was up for grabs.  But, the channel broke down on Aug 9.  As we noted a few days later [see: Currency Crisis on the Horizon] there was little support remaining other than the 10.29 lows.

    We were looking for a deep retracement (10.62) and/or white channel backtest a few days later when DB tested 11 again.Clearly, 10.62 would still look like a decent downside target were it not for the fact that someone (say, a Frankfurt-based central bank) is propping up the stock.

    While it has obviously completed a H&S Pattern that targets well below 10.62 — all the way down to 8.78 — the pattern hasn’t been permitted to play out yet.

    Just yesterday, Reuters reported that Deutsche Bank is looking into “loosening the bond” between its retail and investment banks (good bank, bad bank?), which sounds to me like a precursor to a more dramatic restructuring than has been discussed to date.

    Deutsche Bank is considering an overhaul to loosen the bond between its retail and investment banks, according to three people with knowledge of the matter, a move that could make it easier to merge some or all of the group with rivals.

    The German lender is examining creating a holding company structure, a step that would give it more flexibility to strike merger deals, as it seeks to regain its footing following years of heavy losses and multi-billion-dollar penalties.

    The possibility is likely to be discussed at a meeting of management later this week in Hamburg, other people familiar with the matter said, as the bank’s new chief executive, Christian Sewing, sets a new course for the struggling lender.

    Given the $11 floor under the stock and the increased threat of a merger, spinoff, or other value-enhancing restructuring, continuing to hold short is a riskier proposition.  If it dips below 11, go for it.  Or, consider going long here with stops at 11.

    Either way, DB has been a great trading vehicle for the past two years.  But, it might very well have reached the end of the road.

     

     

     

     

     

     

     

     

     

     

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  • What is Deutsche Bank Trying to Tell Us?

    This morning’s rally is pretty good confirmation that our analog is playing out.  I’ve spent 18 of the past 24 hours charting, and have some additional info on what to expect from SPX, ES, DXY, USDJPY, EURUSD, TNX, ZN, RB, CL and, of course, VIX over the next two months.

    I’ll post it later today, but I’ve yet to come across anything that concerns me from a charting standpoint (i.e., conflicting signals.)  But, of course, there are any number of things that could throw it off track or bust it all together.

    One example is Deutsche Bank.  I don’t usually post about individual stocks, though I do a lot of charting on them for consulting clients.  In this case, I had a client who was trying to decide whether to throw in the towel on the stock.

    I called the bottom 2 days and 4 cents early at 11.23 on Sep 27, 2016 [see: Deutsche Bank – Will it Survive?] and it dutifully bounced up through our various targets until reaching the last target (20.43) I laid out in our Dec 7 post on the stock [see: Deutsche Bank – Another Pause or More?]My view at the time was that DB would correct modestly.

    If DB makes a meaningful reversal here, the rising white channel I’ve sketched in should take form – opening the door to a deeper backtest and fleshing out the rising white channel. It emerges from the falling red channel around Jan 13 at 14.30ish. But, the more conservative target would be the midline at 16.90.

    As it turned out, DB topped out at 20.94 (after gapping higher, gaining 5.6% that day alone) on Jan 25, and reached 16.90 (-19%) less than 3 months later.  It didn’t stop there, however.  It dropped on down to and through its SMA200 and a 50% retracement of its rise where it finally bounced at 15.79.

    Since then, it’s been bouncing back and forth between roughly 15 and 20.  This has been going on for almost a year, since March 2017.  It’s enough to make you wonder where senior management’s incentive stock options are priced.

    The Feb 2 drop was a real blow — the latest drop through the SMA200. As of this morning, DB had dropped 22% since Jan 24.  It’s in line with the string of 20% drops and 20% rallies which had occurred every month or so through last September.

    But, this one looks different from a charting standpoint.

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