First Republic Bank (FRC) is where the powers that be have drawn their line in the sand. "The major banks -- Bank of America, JPMorgan Chase, Wells Fargo and Citigroup -- participated in the rescue plan, each contributing $5 billion. Goldman Sachs and Morgan Stanley each contributed $2.5 billion. "This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system," the Treasury Department said in a statement, while the coalition of lenders said that "America’s larger banks stand united with all banks to support our economy and all of those around us." This morning FRC is down again: "S&P Global downgraded the bank deeper into junk status on Sunday and said the recent cash infusion from 11 large U.S. banks may not solve its liquidity problems." FRC going bust would be another, and maybe final, in the coffin, the confirmation of the failure of the big banks and government to "fix" this mess. I've got FRC on my monitor list, not as a trade, but as a lead indicator for buying more index puts and April VIX calls. FRC - Too little, too late. SPY & QQQ: Key Levels As this volatile week unfolds, two key levels in key indices that if broken would suggest acceleration down. Last minute bonus add: VIX is declining toward 24.00, a support zone that should serve to catapult VIX back toward 30 and new monthly highs. With FOMC meeting on Wednesday this could be tricky, but another run to and above 30 could produce 5X+ returns on April 19th VIX calls. We will be monitoring along with FRC, SPY and QQQ as per above.
