SPDR S&P Bank ETF (KBE) and SPDR S&P Regional Banking ETF (KRE) are on everybody's screens in the wake of the Silicon Valley Bank collapse. And why not? These things fell like rocks.
That downward action looks like if I stood on top of my roof and just dropped this ETF right off like it was a rock.
Now, even if I drop a rock off of my roof, it's going to bounce a little. That's what we saw yesterday.
But regardless, the entire trading world has been watching this banking spectacle with their eyes wide open as if it's a burning car on the side of the highway.
Well, here's the thing.
While this current market fixates on that burning car, there's something else with way more investment upside that they're missing as a result.
So, what could have been more worthy of attention than the banking inferno...
Part of my research involves scouring news outlets for headlines to know not just what's happening, but what other traders are seeing and reacting to.
Well, there were a few headlines I saw that really got my eyebrows raised.
We're all familiar with the good old "news dump Friday." That's when Dan Snyder waits to release the findings of a grand jury investigation into the Washington Commanders until 4:49 p.m. in hopes news desks have checked out and the weekend lets our short memories take over.
Whether it be a Friday or another attention-grabbing event, distractions are legitimate considerations from companies when deciding the timing of announcements.
So it's no accident that, while the banking world was ablaze and drawing gawks yesterday, Apple Inc (AAPL) released the following...
So, this is interesting.
Apple was the one tech company that had held out actions like layoffs, cutting back on hiring, or making other moves that signal pessimism from management.
Up until now, when we get our first little tremor. This tells you that Apple is looking forward, just like everyone else. They're cutting costs, expecting things to get worse.
They're telling you that they're in trouble.
Of course, this matters for more reasons than just your AAPL shares. The NASDAQ 100 is an absolutely huge shoulder rider of AAPL. Largely speaking, it goes as AAPL goes.
As you'll see in the above chart, that 20-day moving average (MA20) is now moving lower, shifting the traders' trend line into a short-term bearish outlook. But even more important is the 200-day moving average (MA200) sitting there at $147.
There's a lot of volume at that $142 mark. If we see AAPL break below that, I think you'll see some panic selling.
AAPL has been looked at as a canary in the coal mine, but its cracks are showing. And the greater market is so focused on banking that it still hasn't realized.
That was the first headline that caught my eye. This is the second...
Talk about a doozy of a headline. Yet, we didn't see much about it in the news.
Look, I get it, fires are pretty and distracting. But there's clearly other stuff going on right now.
This has reaching geopolitical implications moving forward. This is going to start to affect the price of oil.
That's just one more thing that people should be paying attention to that they're not because of banking.
But we're not done yet.
This feels like the fire department showing up with a garden hose instead of the real thing.
What we're seeing are the aftershocks of that initial earthquake. Now these people are looking at everything and telling you that this might be a larger problem that could spread.
So, with all of the attention being put on the banking industry - and panic surrounding ETFs, tickers, and the like - you don't want to be trading that.
That's the fire that everybody has both eyes glued to, as a result, profiting from it is going to be much, much more difficult.
And as I showed you above with all of these headlines, the world goes on while everybody is gawking.
These headlines are substantial in their own right, they're just muted by the fervor surrounding finance.
That doesn't have to be the case for us and other savvy traders, though.
Because as any fire department will tell you, just because everyone's talking about a five-alarm fire raging in one part of town doesn't mean there can't be another wreaking havoc on the other side that deserves attention too.
AAPL, and the price of oil - these are just two examples of the types of opportunities that can pop up while the public consciousness is on a one-way street.
We're smarter than that. We'll keep our heads on a swivel and look out for those fires that escape the public gaze.
That's where the real money is.
I'll see you tomorrow morning - it might be time to start putting our plan into action.
The post Banks are a distraction from the real money in this market appeared first on Penny Hawk.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.