🚨 A Storm Brewing in the Financial Sector? 🚨

Silicon Valley Bank (SVB), a bank that specialized in catering to the tech startup industry, recently collapsed in a shocking turn of events. The bank had invested a significant portion of its deposits in long-term U.S. treasuries and agency mortgage-backed securities. When the Federal Reserve hiked interest rates in 2022, SVB's bond portfolio began to plummet. The bank's shift to long-term securities in 2021, without adequately hedging their liabilities with short-term investments, left them vulnerable. As tech sector economic challenges mounted, many bank customers began withdrawing funds, leading to a bank run. Within 48 hours of disclosing asset sales, the bank collapsed. If Treasury Yields are actually about to start another bullish cycle after their recent breakout, it’s possible we may see more of what we saw with SVB. Read more about the SVB collapse here.

Last year, Jackson Hole 2022 was a significant catalyst for a 43% surge in treasury yields. With Jackson Hole 2023 around the corner, investors are on edge. A bullish weekly chart of TNX (10 Yr Treasury) suggests a breakout, with the Elliott Wave method indicating further upside after completing an ABC correction.

When comparing the XLF/SPY ratio chart to the SPY's performance, it's evident that the financial sector hasn't made significant progress since the great financial crisis and massively underperformed the S&P 500.

The XLF's daily chart reveals a triangle pattern, hinting at a potential head and shoulders pattern in the making. A recent bearish MACD crossover on the daily chart led to a plunge in the stock price and an impending bearish MACD crossover on the weekly chart suggests potential downside.

The weekly chart also showcases a bearish support trendline that hasn't been retested, coupled with clear lower highs, indicating a bearish trend. Two gaps are waiting to be filled below highlighted in blue, further adding to the bearish sentiment. Add to this what appears to be a Wyckoff Distribution Method and things seem like they could get a little dicey. Reference the image from Investopedia and look at the similarities. Is this a reach or an actual possibility?

_{Investment Intelligence Disclaimer: Investment Intelligence is a financial publication of general circulation and provides impersonal advice, not tailored to individual needs. The comments or statements made in our newsletter do not necessarily reflect those of Investment Intelligence or its affiliates and should not be considered as buy or sell recommendations. Unless explicitly indicated, the content of any email communication from Investment Intelligence is not an official confirmation of any transaction. The recipient acknowledges that any use of this transmission and its attachments is at their own risk, and Investment Intelligence accepts no responsibility for any loss or damage arising from their use. It is the recipient's responsibility to ensure the emails are virus-free. Please note that we are a public investor and do not seek any material non-public information. We do not agree to keep any information confidential unless pursuant to a written confidentiality agreement executed by Investment Intelligence. Investment Intelligence does not agree to any restrictions on our trading activity, except as specified in a written agreement. Affiliate Disclosure: Investment Intelligence may be affiliated with certain entities and may receive cash compensation for referrals of clients who open accounts with those entities. Investment Intelligence may also receive compensation from product sponsors related to recommendations. Please be aware that by subscribing to Investment Intelligence, you agree to the terms and conditions outlined in this disclaimer. If you have any concerns or questions, please do not hesitate to contact us. Thank you for being a valued member of our community}