The US equity markets were in rally mode on light volumes until this afternoon when news that Deutsche Bank will be raising a substantial amount of capital (9 billion euros or roughly 11 billion US dollars) through a share sale took the wind out of the sails of the financials which had been leading the charge higher.
Deutsche Bank, aka Buba, is considered the 'gem' of German banks, and this dilution of almost 30 per cent came as a shock as it is almost three times as much as was expected if they were making a significant increase in their 30% ownership of Deutsche Postbank AG that has been discussed. It brings into question what is coming out of the Basel III discussions, as well as further speculation about what bad debts remain undiscounted on the banks' balance sheets.
SP 500
NDX
The Nasdaq 100 futures chart in particular shows the significance of the resistance trend that the NDX faces right now.
“Depart from me, you accursed. For I was hungry and you gave me no food, thirsty and you gave me no drink, a stranger and you did not welcome me, naked and you did not clothe me, sick and in prison and you did not comfort me.' They answer, 'Lord, when was it that we saw you hungry or thirsty or a stranger or naked or sick or in prison, and did not care for you?' He answered, 'Truly I tell you, as you did not do it to one of the least of these, you did not do it for me.’”
Matthew 25:40-46