Why a Financial “Panic” May Be Just Around the Corner
Here’s why global investors should keep a close eye on “sight deposits”
by Bob Stokes
Updated: September 14, 2021
Investors look to an array of indicators in hopes of determining what is next for the financial markets in which they are interested.
Some investors may focus entirely on "technical" indicators such as the Relative Strength Index (RSI), price levels of "support" or "resistance," or say, advancing vs. declining issues, just to name a few. As you probably know, there are many more technical indicators.
Market participants also look at sentiment readings such as mutual fund cash levels, investors' use of leverage, surveys and so on.
Yet, there's at least one indicator that many global investors may overlook, and that's the weekly change in "sight deposits" at the Swiss National Bank.
This chart and commentary from our September Global Market Perspective provide insight:
For the week ending August 6, commercial banks poured 1.2 billion francs into the Swiss National Bank, the largest weekly inflow since mid-June. The cash that banks park at the central bank are called "sight deposits," and, together, the June and August data points represent the largest weekly inflows since the coronavirus panic in early 2020.
The previous spikes on the chart show why we keep such a close eye on sight deposits. Bank officials move cash into the SNB when fear swells, and they pull cash back out when complacency returns.
So, it does appear that fear is starting to develop among bankers.
As our September Global Market Perspective goes on to say:
With total sight deposits pushing to an all-time record of 713 billion francs last month, bank officials seem all too happy to park their money at the central bank. Perhaps they know something that the average meme stock investor doesn't.
Our global analysts will continue to monitor sight deposits along with other indicators, plus, the Elliott wave structure of 50+ global financial markets.
Indeed, our September Global Market Perspective shows a chart with the Elliott wave patterns of two major global stock indexes. The chart's headline is "The Alarm Bells Are Ringing."
Get a complete explanation by following the link below.
The Same Patterns of Investor Psychology Span the Globe
Investors in Japan behave like investors in Great Britain.
Likewise, chart patterns of widely traded U.S. financial markets unfold in similar ways to those in France, Australia, South Korea, India and other nations.
You get the idea: Elliott wave analysis works in any widely traded financial market around the world.
The Wall Street classic book, Elliott Wave Principle, says:
[The] Wave Principle often indicates in advance the relative magnitude of the next period of market progress or regress.
Learn what EWI's global analysts anticipate next for 50+ global markets in the recently published September Global Market Perspective.
You may do so by following the subscriber link below this video.
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