THE WEEK AHEAD: JPM, C, WFC, SMH, AND XBILater in the week, we kick off earnings season with a trio of financials: JPM, C, and WFC,* all of which announce on Friday before market open.
Generally speaking, I haven't played a lot of financials in the past, since their background implied volatility never seems to bump up significantly enough. Here, however, with JPM's implied at 32, C's at 33, and WFC's at 33 -- all toward the upper end of their 52-week ranges, I figured I'd take a look to see whether "this time is different." It looks like it is ... .
The April 20th 23 delta 104/114 short strangle in JPM is paying 1.47 at the mid with break evens at the one standard deviation line, and the corresponding defined risk setup (an iron condor) with strikes at 101/104/114/117 is nearly paying one-third the width of the wings -- a .96/contract credit, with break evens between the expected and a one standard deviation move.
The C April 20th 65/72.5 20 delta short strangle is paying 1.00 even with break evens at the one standard deviation line, implying that a defined risk setup isn't going to pay at least one-third the width of the wings. Moreover, the longs clear of the 20's go 2 1/2 wide ... .
In WFC, the April 20th 49.5/55 22-delta short strangle pays .87/contract with expected move break evens ... .
Out of these three, I'd probably go with the JPM play because the defined risk setup is paying nearly one-third, and the strikes wide of the 20-delta strikes don't go all "wanky." Having strikes in one-wide increments basically everywhere generally leads to fewer rolling headaches. That being said, it's a long way between here and Thursday close, which is when you'd want to look at these underlyings again, adjust your setups accordingly, and see whether they're still worth your while.
On the exchange-traded fund front, the top five implied volatility wise are: OIH (37), SMH (36), XBI (36), XOP (35), and EWZ (32). I'm already in XOP and EWZ plays, so the only thing that makes personal sense for me out of that group are potential plays in SMH or XBI, although I'm sure there's still juice to be had in just short strangling XOP (the May 25th 31.5/38's paying 1.00).
The SMH May 18th 90/108 short strangle (20 delta) pays 2.55 with expected move break evens; its defined risk counterpart, the 87/90/108/111 pays .93, slightly short of the one-third I normally look for, but probably good enough for a less than 40 day until opex setup.
The XBI 75/91 pays 1.98 with expected move break evens; the 72/75/91/94 pays .85 ... .
* -- Given that this trio is closely correlated, it may also be worth taking a look at XLF, although with a background implied of 28, that isn't looking all that juicy at the moment ... .
JPM
monitoring bearish Head & Shoulders set upXLF needs to get over $29.50 to invalidate the bearish head and shoulders pattern present. Focusing on the right shoulder Red Box . Head and shoulders pattern is not confirmed nor completed yet. Disclosure i'm short $bac Bank of America
CSCO 120M butterfly reversalIs tech hot steak coming to an end? CSCO exhibiting a beautiful butterfly formation. What other butterflies can you spot? Clue...think banks, big banks...
Heading towards levels seen before 2008's crisis Banks earnings, Trump and the Fed drove XLF back to where it was before the major financial crisis of 2008.
10 Years later, will history repeat itself?
Long Triggered @ WK Demand on JPMJPM reached WK Demand, price reacting to it, possible bullish engulf by end of day.
$XLF Is the Financial Pullback Something More? (includes video)U.S. financial stocks have been in pullback mode this week despite the SPX moving higher. Considering that financial stocks had been a big boost to market gains over the last several months, this could be concerning.
The XLF is down about 3% - and regional banks KRE down 6% - since the recent top. Let's put this move into context, shall we?
As MacroView as posted before, financial stocks really began to rally in early Sept just as the 10s/fed funds curve bottoms around 90 basis points. The correlation has been rather strong between .65 to .93.
In our view, the curve and financials rallied on two things: markets were trying to price higher inflation (we saw this as the long-end steepened) vis-a-vie higher commodity prices. Then, markets were anticipating Pres. Trump nominating John Taylor as the next fed chair, who would be uber hawkish.
We were happy to take the other side of that bet. Powell is dovish. In turn, we saw yields and copper, particularly, head lower.
The 10s/fed funds rate topped out at 131 basis points and began to trade lower on the above events. Price action in XLF and KRE weakened and the pullback ensued.
Click the here to listen to where support may be found and whether or not financials and the curve will rebound.
Check us out on twitter @macro_view
JPM - Ascending channel, found support on bottom of channel.JPM in a strong ascending channel on the 30min chart. I would long any bounce off of the bottom channel, just like what you see now(10/29).
JPMorgan - Potential accumulation towards 98.38Since price rallied from 81.60 in June this year to the recent high in July, price has been in a consolidation phase.
We saw a false breakout above the 94.47 high in July before making a recent low of 89.07 in September. This is a typical expanding flat structure according to the wave patterns.
Price has too met the minimum expectation area of 123.6 to 161.8 fib expansion.
We are now expecting price to continue its move higher from here potentially targeting 98.38 area.
*Disclaimer - do your own due diligence on the fundamentals of JPM before investing into it.
A potential long position on JPM in a few daysLong position on JPM.
1.- Big buy of market makers with a lot of volume
2.- Price on the long-term trend line for the fourth time.
3.- RSI approaching the oversale area
Goal 1; Intermediate resistance at $ 92.55
Goal 2: Roof of the range at $ 94.03
Let's wait until the price get back into the range that should happen in less than 5 days.
JP MORGAN (JPM)96.3$ is possible target of impulse wave 3.
the impulse wave #4 has several possible targets:
# 67.26
# 78.34
# 82.18
# 85.19
Lets wait for correction and first of all wait for confirmation of end the impulse wave #3
Technical Double Top Could Lead to JP Morgan Chase (JPM) DropJP Morgan Chase & Co recently achieved a double top pattern. This pattern is a significant technical signal that normally sends the stock down to a common level of support. The double top and other technical indicators are detailed below. JP Morgan Chase has been in a long term bull trend and will most likely continue after the stock drops.
When we look at technical indicators, the relative strength index (RSI) is at 55.7791. RSI tends to determine trends, momentum, overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. Currently the RSI is neutral and has been moving downward. It is roughly at the same level it was last time a top was reached. This lead to a continual decline for the RSI and the stock. This is the first indication of likely downward movement in the short-term.
The positive vortex indicator (VI) is at 0.9785 and the negative is at 0.9991. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. The positive and negative levels have been moving in a manner consistent with downward movement for the stock The negative indicator has been rising at the same time the positive has fallen. They have just passed each other which will lead to a continual decline for the stock. Once again, this indicator is roughly at the same level it was when the last top was declining. This is the second indication of likely downward movement in the short-term.
The stochastic oscillator K value is 63.1339 and D value is 76.4461. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals and short-term activity. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. The stochastic is departing overbought territory which tends to lead to a decline for the stock. This is the third indication of likely downward movement in the short-term. This indicator is also near the same level it was as the last top was declining.
SPECIFIC ANALYSIS
The first top occurred in early March. The stock proceeded to drop 13.13% over the next 62 trading days before rising again. The light blue line across the chart represents 86.56 which has been a commonly hit mark for the stock in its recent uptrend. The aforementioned top to this level took 14 trading days to occur and resulted in a 7.90% drop.
Since the stock first broke above the 86.56 mark in December 2016, that line was in a trading day's range 43 times. That is 30% of the previous 144 trading days. This common level will most likely be hit or provide support for the stock over the following 41 trading days.
The final level studied which is most strongly dictating my conservatively placed projection is a Fibonacci retracement. According to Investopedia, "Fibonacci retracement is created by taking two extreme points on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%.". A 61.8% retracement from the bottom to the top of the recent vertical distance marries up exactly with the 86.56 level. If the stock were to give back 100% of its most recent movement (May 31 low of 81.64 to July 6 high of 94.51) the stock would drop to 81.64. This is the fourth indication of likely downward movement in the short-term.
Considering the RSI, VI, stochastic levels, and recent movement from the last top, the stock should see downward movement over the short to intermediate time period. Based on historical movement compared to current levels, the stock could drop at least 5% over the next 29 trading days if not sooner.
XLF potential bearish engulfing pattern forming.The XLF was off to the races this morning as the longer-dated maturities of the yield curve sold off, increasing the spread captured by banks who borrow-short and lend-long. In the middle of the day a key reversal occurred, setting us up for a bearish engulfing candle. This chart pattern is a rally above the previous day's high and a close below the previous day's low, and has a high probability of follow-through selling.
Testing a weekly resistance zone before earningsWFC is testing the top of a consolidation range before earnings.
WFC has been consolidating since it broke below a weekly uptrend line.
Bearish? Short as long as below 60$
Bullish? Buy the breakout?
Financials about to complete a second bearish harmonic patternNotice the Sell Zone shown in this chart
Watching a possible bearish cypher patternCompletion at 91.34 with PT1: 38.2% of CD leg, PT2: 61.8% of CD leg.
JP Morgan - Break below rising trend line would revive bearsThe chart shows fake head and shoulders breakdown. Only a break below the rising trend line would revive the bearish view.
JP Morgan Chase - Head and Shoulders BreakdowThe stock price looks set to test $75.00 levels (target as per the measured height method) in the wake of a flatter yield curve and a head and shoulders breakdown pattern
Bullish Symmetrical TriangleLike JPM and XLF to go higher from here, but I decided to put scarce capital to work in TSLA puts today instead: xdaystogo.com
WELLS FARGO and JPMORGAN CHASE UPDATE. I told you guys I couldn't afford two trades going against me. Am I worried about my WFC bull spread? A little. NOT because I think WFC is on a downward spiral BUT because I don't know if it'll get in my range in time (53ish). It won't stay down for long that I do know. I just hope it does it in time. I have a lot of trades going against me. WFC, HLF, and EBAY (I got into it by accident, LONG STORY) but anyways i'm optimistic about all of my trades (maybe not EBAY, i'm neutral on it by the way) we shall see. So far I got two winner trades this year. URBN and LULU. I'm going to keep on keeping on. Atleast I knew JPM was going down on earnings. I did underestimate WFC though but it wasn't slaughter. JPM's hit was a bit more blunt and I also expect JPM to go up, even faster than WFC although I know banks follow eachother, but WFC can't catch a break. NOT LIKE THEY DESERVE IT!! THEY WONT EVEN HIRE ME! haha
JPM continues to see strengthWith the enactment of deregulation on Dodd-Frank, large banks are gapping up to a higher level. Since Trump's election, JPM has jumped almost 30% and it's gonna retest 88 so as to open the new territory.
