Source: Global Market Report

Stock trading is too popular, and the possibility that regional banks in the US may take policy remedies, may end a trade that disrupts the market but is profitable for some bears.

After banks such as Silicon Valley Bank and First Trust Bank exploded one after another, the market was shocked. The market decline deepened on Thursday, and the decline in the KBW regional banking index increased to 31% this year. There are reports that PacWest Bancorp is studying strategic options, and market news has failed to break ground.

And this news is unspeakable to the bears. The S3 Partners study found that since rising interest rates triggered liquidity concerns and caused turmoil in the banking industry, shorting regional banks has made a net profit of about 7 billion US dollars on the transaction books since this year.

However, until now, regulators have been relatively quick to act after banks have gone out of business. More importantly, analysts say the time may be ripe for buyers to strike back in some markets.

Lawyers for Wachtell, Lipton, and Rosen & Katz, for example, urged the US Securities and Exchange Commission (SEC) to impose a 15-day ban on short selling to buy time to restore market confidence. However, the SEC said that it is not currently considering banning shorting.

Here's what the strategists are saying:

Chris Murphy, Co-Head of Derivatives Strategy at Susquehanna International Group:

“Although it's hard to see a catalyst to reverse the plight of regional banks right now, short trading is very popular and may be tight at some point.”

Tom Lee, Director of Research at Fundstrat:

“It's safe to say it's time for everyone to be hysterical. For example, Pacific West Bancorp, which once fell 5%, had to post a press release on its website clarifying that it was not PACW and finally rose at the close of the market. Similarly, Republic First Bancorp had to issue an announcement saying that it was not the first trust bank and that the stock price decline narrowed from 20% to 5%. And there are also some signs that 0DTE options and short-term speculators are increasing the pressure.”

Fundstrat technical strategist Mark Newton said that regional banks may “hit bottom in the short term” on Friday. According to the signal sent by DeMark, a technical indicator that identifies turning points in the market, there are signs of weak selling.

Tony Dwyer, Chief Market Strategist, Canaccord Genuity LLC

“Financial media and traders are still focusing on the other side of the system, but as we said at the beginning, the more important factor is how uncertainty will further put pressure on capital supply and how it will tighten bank loan standards and overall financial conditions.”

Editor/jayden