The situation with the banks

  1. 1,383 Posts.
    It is now very obvious that the banks have topped out for a Cycle (10+ year top) after the greatest bank bubble of all time. Stock buyers have been treating banks as if they are risk-free safety stocks, when of course they are high-leverage danger stocks, and why they always trade at a discount to the market.

    When I started trading in 1997, with my newly acquired rudimentary trading skills, I decided not to buy banks because they looked overvalued. Most traders said the same thing, while in the meantime brokers were clamouring, saying they were undervalued and an obvious buy. Well - history has spoken and I missed the Great Bank Bubble as well as the Great Tech Bubble

    The situation at the moment is that only two of the majors have broken the cycle trend, WBC and CBA. NAB and ANZ have a fair way to go. Does this mean they are OK, or is it all over?

    I ran them through the Elliot Wave Analyser program. It confirms a cycle top - which basically means a return to the 1997-8 lows or a 62.8% fall. First they must test the Sep 2001 low which is quite a way down. This leads me to believe they will continue to fall from here. Certainly EWAII thinks so - it is unbelievably bearish on them.

    Wait and see, but granny should be unloading the CBAs at last if there is any truth to this analysis.

 
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.