By Elliott Wave International
More dramatic news on the banking front.
On April 25, investors in the shares of First Republic Bank were hit hard (The New York Times):
First Republic Bank Enters New Free Fall as Concerns Mount
The bank’s shares fell by about 50 percent on Tuesday, a day after it said customers had pulled $100 billion in deposits in the first quarter.
As of this writing on April 26, shares are down another 20% intraday.
Of course, there was no way of knowing the precise percentage decline of the bank’s shares ahead of time, but we can say that the dramatic developments were no surprise to Elliott Wave International’s Head of Global Research Murray Gunn.
On March 31, when the April Global Market Perspective published (Global Market Perspective is a monthly Elliott Wave International publication which covers 50-plus financial markets), Murray showed this chart and said:
Use this for [an] early warning signal ….
… Look at the relative performance of bank shares. If what’s going on behind the closed door of banks is all good, the share price should probably not be UNDERperforming its peers. The chart shows that the relative performance of First Republic versus the KBW Bank Index topped out in November 2020. The relative performance had been trending down for many months before problems emerged.
The worry is that investors’ confidence in other regional banks – indeed, the entire banking sector – could become even more shaken.
So, what should you do with YOUR money?
Allow EWI to offer 5 alternatives. “Your 5 Top Alternatives to Banks” is a special report excerpted from Robert Prechter’s book, Last Chance to Conquer the Crash.
In 2021, Last Chance to Conquer the Crash warned of the banking scenario we’re experiencing now.
There’s still time to protect yourself. But as the book’s title says, the window is closing.
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This article was syndicated by Elliott Wave International and was originally published under the headline Your Bank: “Use This as an Early Warning Signal”. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.