Editor's note: This Weekend Edition, we're taking a break from our usual fare to discuss the recent run on the banks. In this Chaikin PowerFeed essay, Marc Chaikin of our corporate affiliate Chaikin Analytics explains how he was alerted to this major shift in our financial system months before it happened... and how his proprietary system can guide investors during whatever is ahead for the markets.
Last November, I shared a major prediction at a special Chaikin Analytics online event...
It probably felt like "too much" for many investors.
At the time, I said that "a major shift in our financial system... could lead to a run on the banks in 2023."
Now, I didn't know that this situation would involve Silicon Valley Bank. And I didn't realize that folks would rush to clean out their bank accounts.
I didn't expect the situation to unfold exactly like this. Nobody could have. But last fall, it was clear that rising interest rates and low-yield bank accounts were changing the landscape...
I expected a lot of money to start flowing out of banks and into areas where investors could earn a higher rate of return. That's just basic economics.
It also seemed obvious that the situation could worsen and cause market volatility. And of course, that's exactly what has happened since last November.
Even though we can't predict specific market outcomes, we can still look for clues...
As I'll explain today, the Power Gauge was watching banks the entire time. And it saw what many financial experts and investors didn't...
Silvergate Capital (SI) was the first domino to fall. Two weeks ago, the crypto-focused bank announced a plan to wind down its operations. Look at Silvergate's performance over the past year...
Pay close attention to the Power Gauge rating at the bottom of this chart. The different-colored bars show the rating for Silvergate on any given day over the past year. Broadly speaking, yellow is "neutral" and red is "bearish." (And green is "bullish." But in this case, that rating doesn't apply.)
You'll notice that the Power Gauge flipped from neutral to bearish for Silvergate on April 5, 2022. And it has been switching between these two ratings since then.
In fact, the Power Gauge warned us about all the troubled banks throughout last year...
Our system flashed a "bearish" sell signal on First Republic Bank (FRC) on April 1, 2022. And it flashed "bearish" sell signals on Signature Bank (SBNY) and Silicon Valley Bank's parent company, SVB Financial (SIVB), on July 11 and July 25, respectively.
In other words, the Power Gauge alerted users to sell (or avoid) all these bank stocks long before they collapsed.
Folks, this is exactly why I built the Power Gauge...
It's my life's work. I've put everything I've learned in my 50-year finance career into it. And now, the system is able to help everyday investors thrive in any market environment.
In the end, I don't pretend to know exactly what's coming next for the markets...
But with the Power Gauge at our side, we can pinpoint major shifts – like a run on the banks. And we can do it before most investors even begin to figure out what's happening.
Good investing,
Marc Chaikin
Editor's note: Wall Street legend Marc Chaikin accurately predicted the recent run on the banks... months before it happened. And he's now stepping forward to share what he thinks will be the next phase of this banking crisis. On Tuesday, March 28 at 8 p.m. Eastern time, Marc will reveal the one type of trade he believes you need to make this year to be on the right side of history. Click here to save your spot for this can't-miss briefing.
