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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