U.S. equities finished sharply lower on Thursday amid reports hedge funds are pulling collateral out of troubled German financial titan Deutsche Bank AG (USA) (NYSE:DB) amid ongoing concerns about its balance sheet health as it struggles with a tepid European economy, Brexit costs and fresh regulatory fines here in the United States. Spiking the punch have been indications the German government is reluctant to get involved with state aid to the bank.
DB shares lost 6.7% as headlines filled up with stories eerily reminiscent of the 2008-2009 financial crisis — full of questions about counterparty risk, contagion, increased credit default swap prices and tightening interbank liquidity. As a result, the bank’s market cap dropped below beleaguered new-tech disappointment Twitter Inc (NYSE:TWTR). Which is sort of funny.
In the end, the Dow Jones Industrial Average lost 1.1%, the S&P 500 Index lost 0.9%, the Nasdaq Composite lost 0.9% and the Russell 2000 lost 1.4%. Treasury bonds were stronger on safe haven flows, the dollar was mixed, gold gained 0.2% to end its recent selloff and oil extended its OPEC-driven rally from Wednesday adding another 1.7% (despite early pushback from Iraqi oil officials on its production level).
Volatility surged higher as investors sought safe havens. That pushed the Velocity Shares 2x VIX (NASDAQ:TVIX) recommended to Edge subscribers earlier this week to a gain of 12.3%.
Technical analysis of the QSE index
This week’s uptick was on lower volumes and that indicates weakness of that up-move. However, we are generally optimistic on the index as positive momentum has been picking up. We maintain our suppor