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Another Financial Crisis?

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Last Week’s Market Activity

The looming collapse of Silvergate Bank and Silicon Valley Bank has turned what would have been an otherwise quiet week upside down.  The collapse of these two financial giants led the S&P and Dow down nearly 5%, the Nasdaq down just over 5%, and the Russell down nearly 8% week over week.  This tremendous shake-up in the banking sector has led to widespread panic and fear of another financial crisis.

Macroeconomic Indicators

The main market movers of the past week have been the recent bank collapses.  It seems like it will be tough for Silicon Valley Bank and Silvergate to find buyers, as customers withdraw funds at astonishing rates, leading to bank runs.  Silicon Valley Bank will be the largest bank to collapse since the 2008 financial crisis if they are unable to find a buyer for the underwater bank.  

Unfortunately, the collapse of SVB could lead to widespread contagion in both the banking and tech sectors.  After all, many tech companies don’t generate a profit, so they have to rely on hefty cash reserves to keep them afloat.  It seems that these larger customers may only see a small fraction of their SVB deposits, as the FDIC reaffirmed they only insure $250,000 per bank per depositor.  Companies like Roku have already come out and stated they have the potential to lose 25% of their cash reserves from the SVB collapse.

Upcoming Market Catalysts

The markets will undoubtedly be affected by the ongoing events in the banking space, however, there are quite a few economic data releases this week as well!  On Tuesday, we’ll get to see February CPI data, and on Wednesday, information on PPI data and retail sales will be released.  These will undoubtedly be two very key days for the markets this week.  Thursday and Friday will be relatively slow, as we’ll only get receiving information on housing starts, building permits, and consumer sentiment.  

Notable Earnings Releases

Earnings season continues to slow this week, with just a handful of notable companies reporting earnings, such as:

03/12 – GitLab (GTLB)
03/13 – Lennar Corporation (LEN/LEN.B)
03/14 – Adobe (ADBE), Five Below (FIVE), Williams-Sonoma (WSM)
03/15 – FedEx Corporation (FDX), Dollar General Corporation (DG)

LEN will give us a good idea of how the home builders are faring as mortgage rates continue to increase.  ADBE will provide insight as to how their Figma acquisition is looking and will likely let investors know whether or not they have been affected by the SVB collapse.

FIVE and DG will give us key information on how lower-income consumers are spending their money.  And lastly, FDX will provide commentary that will help us gauge how the US economy as a whole is performing since they’re one of the largest logistics companies in the world.

⚡ Watchlist ⚡

Monitoring the market conditions this week.

⚡ Trade Wins from Last Week ⚡

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