Is this the most resilient stock market ever?

Banks are getting cucked rates keep rising and the stock market kinda just stays flat.

Am I just fucking brain dead or am I missing something?

I feel as if we should be much lower and the big market cap stocks are not far off from there ATH even tho inflation is still very prevalent and economic and money velocity has been slowing.

What am I missing here what is priced into this market that is keeping it afloat?

To be perfectly clear, there is no possible means of stimulating the economy right now.

If we experienced another COVID-19 pandemic, 9/11, 2008 financial crisis, rates will likely continue to go up, not down. The fed knows that they cannot stimulate the economy without making inflation worse which is the last thing you basically want to do during a crisis.

• As far as the banks go, pausing rates would be just as much of a disaster as slashing them. You'd essentially be telling the American people that the bank's overleveraged problem's (for being too risky) is more important than the purchasing power of the tax paying citizen--it's not. Pausing rates aren't guaranteed to do anything either because a lag exists. At the very most, some banks may have more room for liquidity however, in a scenario like this, the fed would lose it's grip on inflation which would eventually prolong rate hikes making problems for the banks even worse.
• Slashing rates for the banks would trigger a massive demand for cash--hence it's purpose in stimulating the economy. However, in this case, since inflation is still relatively high and inflation is the result of too much supply of cash, institutions--who have access to tons of debt very quick--would pull as much as they can and use it before it devalues. Demand would be out the roof the moment this happens because institutions know that it's value would become less right away as supply balloons. By the time your average tax payer can borrow cash, bread will cost $25,000.

So do yourself a favor, forget about rates being cut or paused anytime soon. It's not happening for at least another year or two.

​

TLDR:

Rate hikes aren't going to pause or be slashed for a long time, even if we have some kind of disaster. Fed can't stimulate the economy without making inflation worse.

Deutsche Bank balance sheet: https://investor-relations.db.com/files/documents/annual-reports/2023/Annual-Financial-Statements-of-Deutsche-Bank-AG-2022.pdf

Credit Suisse balance sheet: https://www.credit-suisse.com/about-us/en/reports-research/annual-reports.html (2022 Consolidated financial statement)

Most of their assets are illiquid and their reserve and cash on hand balance has shrunk by about 50% from a year ago. The same thing happened to credit suisse. They have about 69 billion euros on reserve and this month have to make a payment of about 57 billion euros from mortgage backed securities they issued to customers. Their revenue is basically non-existant for a bank that manages 1 trillion euros. The balance sheet looks, well, balanced and healthy from a glance, but I think there are some small risks here and there, and very big similarities to CS's situation. I'm not an expert on this, so please tell me what you think about what you see.

​

Those who have borrowed lots of money to buy assets, such as banks and insurance companies, are in a lot of trouble because the assets they bought have gone down in value, meaning they have lost a lot of money. This means they are going to have a difficult time paying back the money they borrowed.

The government has to come step in and fix this situation to make sure that the banks are able to pay people back. To do this, they have to borrow a lot of money, and they do this by raising money by selling bonds (which are essentially getting loans from people).

In order to raise money by selling bonds, the government has to make bonds an attractive asset. That is, the bonds have to be a good investment, and provide good returns to those who buy the bonds.

This means that the federal reserve must raise the interest rate, because that determines the yield of bonds. Nobody is going to buy a bond at 1%, because the return on investment is so low, in fact, even losing money because inflation is higher than 1%. So the government has to set bonds at something like 7% or even 10%, because then people will buy it, because it will provide a good return even with inflation.

But if bond yields are at 7% or 10%, then that means interest rates are at 7-10% as well.

Higher interest rates hurt banks because interest rates are the cost of borrowing money. And banks' whole business is the business of borrowing money. It makes it more expensive for them to borrow money to make investments. If banks have to pay 7% to borrow money, then they have to charge 8% to loan money to people. And if people have to pay high rates to borrow money, then less people will borrow. This makes banks lose profit.

For example, if you want to buy a house, and want to get a loan from the bank to pay for the house, it would be nice if the bank offered you a loan at 1%. Then, the loan to buy a house will be cheap, and many people will buy houses. If the bank is charging 8% on a loan, then getting a loan to buy a house will be expensive, and people won't buy houses (or get bank loans).

So as you can see, when the government has to raise money, they have to sell bonds, and to sell bonds they have to raise the interest rates, and when the federal reserve raises interest rates, banks must pay more to borrow money, and they must charge their customers more for loans, which means less people will loan, which hurts the bank.

And why does the government have to raise money at the moment?
Because they have to help out the banks who have made bad investments and can’t repay the money they borrowed.

​

Finally, one must note that the banks and insurance companies are in two situations. First, they are holding assets (like holding a stock), but their assets and investments are doing poorly. Secondly, they have borrowed money to buy these assets.

So the government is going to step in and help the banks. They are going to do this by printing lots of money and raising lots of money (by selling bonds).

​

The big problem is the federal reserve determining an interest rate that:

A - Makes bonds attractive to people as an investment

B - Doesn't hurt banks too much

First Republic stock up 24% as First Citizens deal for Silicon Valley Bank lifts banks

7:37 am ET March 27, 2023 (MarketWatch) Print

By Barbara Kollmeyer and Steve Gelsi

Bank stocks rise after sharp stock drops in recent weeks following the demise of Silicon Valley Bank

Shares of First Republic Bank surged 24% in premarket trading on Monday and led a swathe of regional lenders higher, following news of that failed Silicon Valley Bank finally has a buyer and at least one analyst upgrade in the sector.

The Federal Deposit Insurance Corp. announced earlier on Monday that First Citizens BancShares Inc. (FCNCA) has entered a deal to assume all loans and deposits of Silicon Valley Bridge Bank, which was created by the FDIC following the closure of Silicon Valley Bank.

First Citizens BancShares stock is rallying by nearly 24%.

See: First Citizens enters agreement to buy Silicon Valley Bridge Bank, says FDIC

Bloomberg reported that U.S. authorities are studying ways to enhance their emergency lending facility for banks in a way that would buy more time for First Republic (FRC) to stabilize a drop in deposits.

First Republic has lost 90% of its value in less than two weeks, hitting an all-time low of $12.18 a share last Monday, amid jitters around its overlap with Silicon Valley Bank.

Citi on Monday upgraded shares of M&T Bank Corp. (MTB) and KeyCorp. (KEY) to buy as offering an attractive risk/reward after an analysis of bank balance sheets. KeyCorp. offers the largest benefit from repricing of fixed assets, which will help its profits in 2024 and 2025, Citi analyst Keith Horowitz said.

M&T Bank ranks as a "high-quality play and we see excellent value" for a bank with peer-leading returns and the strongest capital position, he said.

Shares of KeyCorp rose 7% in premarket trades, while M&T Bank is up about 3%.

Hard-hit bank stocks snapped back. PacWest Bancorp (PACW) climbed 8% and Zions Bancorp (ZION) rose 3% .

The FDIC has been trying to auction off Silicon Valley bank for about two weeks, since it became the largest U.S. bank to go bust since Washington Mutual in 2008.

-Barbara Kollmeyer

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

preface: this is for sure borderline shit posting, i wanted to flag it YOLO but it needs to be 10k, so mods, I am sorry in advanced but...

​

Hi, I lost on spy puts today, so in revenge, I opened up 3.2k baba calls (35 of $90 3/31 calls, 5 of $89 3/31, and 5 of $88 3/31). Right when 4pm hit, I realized hmmm, that may have been really dumb. Now hear me out, no worries, I did my DD! ^{I looked at twitter, reddit, and a lousy Robinhood chart, and I think I saw some nice call flow which is probably just writers buying their contracts back...} So yeah, am I screwed? you tell me. I personally think that $Baba is a ^lil undervalued, cause my god, they own the majority of Chinese ecommerce. I don't know, maybe they don't. Just do me a favor and leave a comment "hey man they're going to be up 8% tomorrow. It would mean a lot,. thanks for listening to my TedTalk. Mods, I understand if I must be put down like the dog I am. Also please be nice, I am sensitive.

I was not able to do any trading today unfortunately but caught the end of the market today to see us close. Looks like we end up with a low volume and tight $3.36 range day today.

SPY DAILY SUPPLY AND DEMAND

​

https://preview.redd.it/w074t8yhecqa1.png?width=975&format=png&auto=webp&v=enabled&s=ea0253d96b6aa73636b7ae21132d18568fb72bf0

Taking a look here at the supply and demand on the daily we actually put in a new supply (resistance) at 395.82. One thing to note much like the 3945 demand on futures from last week that this is a weaker supply than the other supplies like 399.07.

So this is where much like a few weeks ago when we had supplies and demands “out of order” or that “didn’t make sense” we are seeing an imbalance here right now and basically seeing price action that doesn’t make a ton of sense just yet.

With this supply (which technically since below price action is actually a support now) being established today we are now in the process of making a new demand (support) The question will be do we come back down to 393.07 demand (support) before we make a new demand…. Or more probable will we attempt to turn this 395.82 supply into a demand. The most probable scenario I see is attempting to turn this into demand which would be extremely bullish.

However, as you can see today we nearly to the penny rejected that 399.07 level. That 399.07 area remains a very strong supply (resistance) that bulls need to breach still.

SPY DAILY PRICE ACTION

​

https://preview.redd.it/4js2ehgiecqa1.png?width=989&format=png&auto=webp&v=enabled&s=ac0d7f04be587ea9a4a64fdc46ed3c319d28dcab

The biggest things to note today from price action stand point is the fact that we turned the daily 20ema into support now. However, we also once again failed to breach the daily 200ema. The daily 200ema as you know is a major level and that many times takes numerous days of interaction to break through whether over or under.

Bulls will look to continue to hold the daily 20ema as support and much like futures daily will look to get a daily 8/20ema bullish crossover. The last step for the bulls before a bigger run will happen is a closure over the daily 200ema at 399. If and when that happens my target will remain 405.2. However, if the bears can fight back and get us to close under the daily 20ema and most importantly under that key 395.8 supply (now support) then I would start to target 393 and possibly 390.1 support once again.

SPY Daily Levels:
Supply- 395.8 -> 399.1 -> 405.2
Demand- 393.1 -> 385.9
Support- 396.4 -> 393.1 -> 391.9
Resistance- 398.2 -> 399 -> 401.6

FUTURES DAILY SUPPLY AND DEMAND

​

https://preview.redd.it/iqc11lgjecqa1.png?width=970&format=png&auto=webp&v=enabled&s=3b9e9f79ee03220d829ab84934a69bc8fa6b233b

Now this is why I enjoy trading SPY but analyzing both futures and spy… when we look at the supply/ demand here we actually do not see a new supply being established yet on futures daily. However, there is a pretty interesting different here in the fact that SPY daily is approaching a new demand (support) being established but futures is closer to establishing a new supply (resistance).

This is where things will be more interesting to watch play out this week. We did not quite reach the 4040/4055 supply (resistance) area on futures today. That was and remains my first upside target before a possible bigger run to 4095 this week. However, if we see a red day tomorrow we actually very well could establish 4013 as a new supply (resistance) which would open up a sell off down to 3972/ 3945 demand (supports). This is where we as I said have a discrepancy between spy and futures here. Eventually these will correlate and correct but for now we find ourselves directionless.

FUTURES DAILY PRICE ACTION

​

https://preview.redd.it/j52edbxjecqa1.png?width=975&format=png&auto=webp&v=enabled&s=519a01b5d40eac2a856f0eda294df1309f97cb38

Now looking at daily futures price action here I actually have to favor a slight bearish bias compared to spy… what I am seeing here is that we closed out a gravestone doji with a rejection off the daily 200ema and we failed to get to 4040/4055 supply/ resistance. Now the one thing to keep in mind for the last 3 days now you can see we have had some pretty large wicks and all three days have closed out as dojis.

SPY favors upside continuation tomorrow while futures daily I would say favors an upside top and breakdown to 3970 or potentially 3945 support. However, if we followed SPY daily upside then my target remains 4040/4055 and ultimately 4095.

Futures Daily Levels:
Supply- 4040 -> 4055
Demand- 4095 -> 3972 -> 3945
Support- 4000 -> 3988 -> 3972 -> 3945
Resistance- 4014 -> 4040 -> 4055 -> 4085

VIX

​

https://preview.redd.it/2edhm1ekecqa1.png?width=975&format=png&auto=webp&v=enabled&s=041d883aa0c35c1c9970765d1beb3242e583b0ba

The VIX continues to also point to further upside and I actually am surprised to see such a small green day of only 0.19% on SPY with such a large 5.15% drop on the VIX.

The VIX daily is now experiencing a bearish (bullish for markets) 8/20ema crossover and is attempting to break the support which sits at 20.5 for tomorrow. IF we break that support then my downside target is 19.68 and eventually 17.72 to 18.21 support area.

I do not always follow the fear and greed index but it definitely should be noted we are in a “fear” market and were in an “extreme fear” market just last week. The risk is definitely to the upside versus the downside currently.

DAILY TRADING LOG

I was gone the majority of the day today and did not get to make any trades today. I do still have some 18dte 396 calls I am holding. I was not around at open which I could have sold them for about 15% looking back it appears. My upside target remains 405 for these and I wouldn’t mind an average down if we touched and bounced off 390.1 sometime early this week.

Looking forward to get back to trading tomorrow and operations as normal tomorrow!

Find WallStreetBets on YouTube, Twitch, and Discord

Check out our Earnings Thread and Rules.