Banks are finding it increasingly difficult to navigate the shoals of deflation and negative interest rates, although this hasn’t stopped BKX from staging a nice dead-cat bounce over the last six weeks. It has made this vehicle an enticing short based on the corrective abc pattern shown. The pattern was validated last week by some precise head-butts at the ‘p’ midpoint resistance, 65.47. Let’s plan on shorting 400 shares via a 68.34 offer, stop 68.51. Option bid/asked spreads are prohibitively wide for a put-buying strategy, but we may be able to use a spread order to stake out a position. An out-of-the-money put calendar spread would give us some leverage with risk under tight control. Stay tuned to the chat room for further details as they develop in real time. _______ UPDATE (March 27, 10:19 p.m. ET): It’s one thing for DaBoyz to lift the broad averages by putting the squeeze on shorts. However, getting this pig to fly is a far more daunting challenge, since the banks stocks have significantly underperformed since mid-February, when Wall Street launched a bear-market rally. We may have to come up with an alternative plan if we’re going to short this brick, since the 68.34 target is looking too ambitious at the moment. _______ UPDATE (April 3, 10:29 p.m.): Zzzzzzzzzzzzzzzzzz. I am taking this sleep-apnea poster-child off the sheets, since it has done absolutely nothing for the last 30 days.
