Monday March 13 @ 9:00am

“There are no atheists in a foxhole, and there are no pure fundamentalists in a market correction.”

The markets experienced a significant decline last week as a run on Silicon Valley Bank escalated into a wider regional banking crisis. As the weekend approached, concerns were mounting that the crisis would have an impact beyond the affected banks and into the broader economy, given that numerous companies had deposits trapped in the now-closed bank. On Sunday, the failure of Signature Bank further amplified the risk of a bank run, but the Fed and Treasury Department intervened late that day with a plan to backstop depositors at both banks and assist other banks in ensuring their liquidity. This announcement led to a strong rally in index futures and eased investor fears.

Nevertheless, the situation remains highly dynamic and volatile. Although fears of a bank run are abating, investors are selling their shares of all regional banks as they realize that depositors are protected at the expense of shareholders, who have no such protection. More small banks may fail, and investors are seeking to safeguard their investments. Consequently, we can anticipate that shares of KRE, the regional bank ETF, and all individual regional bank stocks will continue to decline.

Markets will open lower this morning and are expected to remain highly volatile throughout the week, given the release of critical economic data, starting with tomorrow's CPI report. In light of this dynamic situation, most investors, including experienced traders, may wish to remain on the sidelines, observe, and learn. It is essential not to let emotions turn into panic or become one of those unfortunate investors who capitulate at the bottom. If you must trade, be very aggressive and extremely nimble, as adverse moves can quickly spiral out of control.