I am sure everyone heard that major hedge funds unloaded shares Deutsche Bank AG (NYSE:DB) today. When the news broke, the stock took a major dive, taking the market with it. Everyone is expecting a default and possible bailout from Germany or the European Union. Shareholders would be wiped out and its possible many other banks would be hurt in the aftermath. Essentially, it is a Bear Sterns or even Lehman Brothers situation.

So why did some institutional traders buy Deutsche Bank today? Simply put, they are betting today was a freakout and it could bounce tomorrow. Why do they think that? A simple trend line connecting the lows. If you note the stock chart below, and connect lows, the stock price hit that line today. Notice how every time the stock hit this line it bounced. Sometimes charts are just that simple to read. Time will tell if this risky trade pans out, it is not for the avearge investor. Far too much risk.

By Pro-Trader

Markus Teller