Hard times have once again befallen Deutsche Bank, which played a key role in blowing the global mortgage bubble that popped eight years ago. On Wednesday, the bank announced a $7 billion loss for Q3 and a dividend cut, sending shares plummeting by 6% on the NYSE. The long-term chart (see inset) suggests the stock is likely to fall a further 68%, to at least 9.10, before the carnage ends. If that price is hit, it would represent a 94% decline from the record-high 158 recorded in 2007.
From a technical standpoint, using our proprietary Hidden Pivot Method, the stock tripped a ‘mechanical’ short to 9.10 in March at 34.38, stop 42.81. Traders who are familiar with our forecasting system will notice in the chart that the target for Deutsche Bank’s bear market is minus $16.18. Although this is a practical impossibility, we know from experience that it could imply that a bankruptcy lies down the road. That proved to be the case for Lehman Brothers and Bear Stearns, whose charts similarly projected into negative territory prior to the Great Financial Crash of 2007-08. Even if DB does not go to zero, we would rate the chances of a fall to at least 9.10 at around 70%._______ UPDATE (September 26, 9:28 a.m.) There’s chatter in the chat room this morning about Deutsche Bank, whose shares have been plumbing record lows recently. It was nearly a year ago, with the stock trading just below $30, that I projected in the tout above that the stock would fall to at least 9.10. That target still holds._______ UPDATE (Oct 6, 10:44 p.m. ET): Patriotic buyers have given Deutsche a reprieve. Now, if the stock pushes above 13.65, that would put a 14.69 target in play (a=11.19 on 9/29; b=13.28 on 9/30); and c=12.60)._______ UPDATE (Oct 10): Who are the suckers buying this rally?? Do they even know, as Harry Dent points out in his latest book, The Sale of a Lifetime, that Deutsche Bank’s $54.7 TRILLION derivatives exposure is 20 times Germany’s GDP?