HBC's dirty little secret

Today, HBC bank got a swift slap in the face fine of 1.92 billion dollars! Thats a pretty hefty sum of money. How many mexican pesos is that?

What happened?

They were booked helping the mexican drug cartels launder money, and now the book is being thrown at them. About 1.92 billion pages thick.

My reaction:

When I first heard the news, I was pretty happy and ansy to find out how much their stock price had dropped. Being a short term trader of price movement, I figured this would be an easy 1-2-3 money maker. Instead, I see it actually went up 30 cents. In the green! This just furthers my suspicion/belief of an efficient market. Normally, when a company receives bad news regarding a loss in earnings or assets of X amount, its usually followed by a negative move in the price. That being said, this "news" probably already affected the stock price a few months back. Think about it, as a ceo, how do you not know of investigations that can cost this much? You would have to be blind and deaf or just oblivious to miss something this big! This will definitely have an effect come earnings report season though when all the other traders out there realize the 1.92 billion hit to the balance sheets. So I missed out on making that quick buck. Or have I? See below.

My suspicions:

1) Its been going up for a while now, so there are probably a lot of people looking to take their profits. Probably over the course of 6-8 months. So I am anticipating a drop in price. Expecting a bottom of maybe $45, based in support lines.

2) assuming the fine has already been somewhat factored into the price, so considering that there hasn't been too much of a hit to the stock, its unlikely that the majority of investors actually responded to it. So when that does happen, you can expect a 1.92 billion dollars worth of effect on the price.

3) with the way the global economy is sounding, Im not too bullish on the market. I am not saying don't stop trading,because thats just stupid. You can always ride the waves of price action to make your ends meet.

So what to do with HSBC?

I personally wouldn't buy yet. I expect it will drop in the coming weeks which will also signal a short term downtrend. Over the next few weeks I am expecting maybe a $1-2 dollar drop, so I would look to buy then. The upside would be a few cents; but a gain is a gain.

I would look to buy at about 5% below the previous pivot points just to be safe.

Other price targets I anticipate to be profitable are:

Any price under $50 for a short term gain of 0.50 cents to $1. Be careful though, because of the anticipated down trend, you should be conservative. The reasons are listed above already.

Anyway, look for entry points at the followin prices.
$50
$49.75
$49.50

Basically increments of 0.25 cents under $50.

Good luck trading!