My father grew skeptical of banks and what it represented. A man of the soil, he saw wealthy bankers getting filthy rich on farm foreclosures – one of the few industries, which managed to survive and thrive in those terrible times.
When our version of “The Depression” rattled markets in 2008, his insights reminded me it was time to pay closer attention to the banking sector.
What Lehman’s collapse did was essentially separate the banks with strong fundamentals from those that had none.
We used our charts and analyzed one specific bank: Hong Kong listed HSBC.
- The fatal drop below the long-term support area near 124.
- The second fatal failure of lower support near 112
- The pile driver pattern which carried price to 96. This is an important level on the way down, and also on the way back up.
- The failure to move back above 124 which meant the collapse below the pile driver low of 96 was almost an inevitability.