Free Market vs The FedAs of late, the vast majority of us probably have been hearing about "too big to fail" or " a free market vs. a central market" What does all of this mean?"
Well, let's go over some of the basic stuff. As in some of my prior posts, it is important to understand that the "Fed" does NOT control mortgage rates or loan rates from your local banks. Let me repeat that the Fed does NOT control mortgage rates or consumer loan rates
So now you might ask yourself why the Fed raises rates matter?
Well, that's a great question. Because, in short, it should not matter if we were in a free market. Well, sadly, we are not in a free market. We are in a centralized market with different flavors available to us.
"Ah, but Guy, you just contradicted yourself by saying the fed does not control mortgage rates, and now you're saying we're in a controlled market rabel rabel rabel "
Let me explain... The Fed cannot have any direct contact with "average" consumers; it's currently illegal FOR NOW . Now, everyone, the biggest fear with CBDC is a rightfully placed fear. And we will discuss this in a separate post.
So, view the Federal Reserve's manipulation of the economy as a game of pool (billiards) or snooker; what have you. In billiards (for the purpose of the post, billiards = pool), the player cannot directly hit the numbered balls with the stick (cue). Instead, one must use a medium to engage the cue ball. So, to pocket your balls, you must have a small degree of understanding of physics to transfer energy from you to the stick to the cue ball to the desired ball into the desired pocket.
The Fed (cue) is the same way. They set the FFR (cue ball), which then goes to the regional and big banks (numbered balls), which then sink into the economy (pocket)
So, how does this work? To explain that, you need to understand how a bank makes money.
(The Following is highly watered down for simplicity's sake)
A bank does not make money because you have an account with them. On the other hand, a bank makes money BECAUSE you have an account with them.
So when you use your local JPM, WFC, or C bank :) as a piggy bank, they pay you an interest rate of something like a percent of a percent; however, it's still considered a liability to the bank because that's cash flow going to you from them even if it's a penny a year.
So, how can they make money then?
The fractional Reserve system. Mike Maloney debates this, and I'm super interested in hearing his thoughts on this... another post for another time.
What is the Fractional Reserve System? Basically, for every dollar you put into your account, the bank can lend out 10$
It's basically in place because you're not running to the bank to close your account. So, they can do this. When you put money into your account, it's already out the door into someone else's pocket in the form of a loan by the time you place your wallet in your pocket/ purse what have you. And that's probably too slow for the bank. (velocity of money)
Well, that bank's balance sheet of physical liquid cash probably only is enough to pay the onsite staff hourly wage the bank needs more. so they have one of two options
1. go to the Fed and borrow money at the FFR
2. go to the repo market and borrow from another bank by offering t-bills and bonds as collateral. (shadow banking)
Typically they go with number one because it's cheaper.
The vast majority of times they use the repo market is for cash now! or if their risk management department is trying to make some quick cash off the bond market. (shadow banking is outside the purview of this post, and I'm still learning about it. I will post about it later)
( the fed lining up their billiard shot) So, the Fed has decided the US economy needs to grow more...
(the Fed hitting the cue ball) So, lets say the Fed makes the FFR 0% (hypothetically LOL)
( the cue ball hits the numbered ball) So your local JPM will go to the Fed and take out a loan at 0%, so they need to lend this money out and make money, and make their, JPM's rate, interest rate on that money 3% LOL!
(The numbered ball sinks into the desired pocket) you the consumer want to go out and buy something you can afford on your 9-5 salary.
So you go to the bank and qualify for a loan at their 3% rate to be amortized over 10-30 years, and the economy grows.
If that sounds familiar its coincidence LOL
However, in a free market how it would work is the loan system would be heavily dependent on the local economy and local wage potential.
How?
If a bank is set up in an area with low-income earning potential, then the market will tell the bank exactly how much they can charge on money.
Example: let's say the Risk Manager at your local WFC decides he is conservative and makes the DTI Ratio for loans 30%. That means the minimum someone must make for a 200,000$ loan is around 60,000$. If the local median income is 45,000$, no one can afford a 200,000$ loan. The maximum loan amount they can make is around 150,000$.
So, for the bank to grow, it either needs to up the DTI requirements, it needs to be content with its current earnings and hope the area grows or wages increase, or it can close down and move.
Now where the free market comes into play is when WFC is having their DTI at 30%, JPM is at 40%, and C is at 60%, (free market remember) in the same area as the example
The following happens:
WFC sees their default rate is less than 10%
JPM sees thier default rate at 40%
C sees thier default rate in the upper 80%.
So, what this means is that the market is telling WFC they are leaving money on the table but are playing it safe. Because less people qualify for the loan
JPM has almost found the sweet spot. 40% of their loans are in default, but more than half are paid on time. could use some minor tweaking but solid none the less. (With my risk tolerance, 30-35% default is a good number depending on loan size.)
C is in trouble because they have lent out too much, and people can't afford that much money in the area.
So in a free market, WFC will fail in the area because they're not seeing enough volume, and C will fail because they're seeing too much volume. which leaves JPM to buy up both of the failing banks and grow bigger LOL!
JPM
Bullish Cypher target $37Looking at this trading range, I've spotted a previous bearish cypher, a current bullish cypher. Price Action has retrace back to the Previous (B) leg of the Bearish Cypher. The Previous resistances, is currently acting as support for the D leg of the present bullish cypher.
We can confirm this w/ the bottom of the Stoch RSI.
I'm looking to buy put options on $faz ( the financial 3x bear ETF ) near the open bell Monday Morning.. I can also buy shares in the premarket of $xlf or call options. It will depend on the price action of both at that time.
JHEQX Quarterly UpdateJHEQX Update
On March 31 at ~3pm the contracts were rolled to
contracts: ~40,000
roll price: 4089.21
short call 4320
long put 3885
short put 3280
For any of you that have not checked out the indicator on their own chart yet, I published the script privately last month and received overwhelming positive feedback.
Get a copy of the script here:
Thank you all for your interest and support.
At the start of March I outlined 2 possible directions JHEQX would flow and after a brief fake out lower in early march, turned around and ran up to the Call strike for expiry.
This completed leg 2 of a 6 month prediction I outlined a month earlier.
Sentiment has changed in the past few weeks to a more Bullish as "this isn't QE" liquidity entered the system after SVB and provided very positive overall Gamma for end of March into early April.
The S&P has now completed the shoulder and retesting the neckline for a much broader 200D move higher to the JHQDX strike at 4290 for the end of April.
When Fear Reigns Banking Majors GainIn times of crisis, investors rush to safety. When risk shows in places of safety, bank runs begin. One's pain is someone else's gain. Silicon Valley Bank (SVB) & Signature Banks' combined assets at $300 billion is witnessing a flight to safety.
At $300 billion, it is trivial relative to $23 trillion within the American banking system. Remember that the FDIC only insures deposits up to USD 250k. Both institutional and individual clients holding large deposits in regional banks are rushing to move their funds from regional to major banks.
Between 2020 and 2022, regional bank index outperformed the broader bank index. Regional banks business was designed to be lean - collect deposits and extend loans to home buyers and local businesses.
This was meant to be less risky relative to banking majors whose businesses were sophisticated and inherently risky. Hence the banking relief law passed in 2018, made regulations less onerous to banks with domestic assets of less than $250 billion.
As a result, by end of 2022, US had 2,100 banks with $19.8 trillion in assets. Only ten out of these 2,100 banks had domestic assets more than $250 billion.
Lax regulations led some regional banks astray with concentrated bets on customer segments and risk management of asset and liability maturity risk. With rates rising, tides receding, banks that were swimming naked became obvious.
Chart below contrasts the impact of unrealised losses on select US bank's tier 1 capital ratio. It is little surprise that SVB imploded with such an adverse capital situation when unrealised losses were accounted for.
Now as crisis of confidence in banking spreads across both sides of the Atlantic, depositors are rushing to move their money to larger safer bank and money markets.
FT reported on March 15th that large US banks are getting flooded with fund transfer requests from regional banks. SVB has triggered a tectonic shift in deposits unseen in more than a decade. Veteran hands know well that anxiety created by small shocks make larger crises less likely.
JPM, Citigroup are among the beneficiaries of regional bank pains. To aid customers to move deposits swiftly, these banks are taking extra steps to speed up client onboarding. It is reported that these banks are reassigning employees to account opening linked jobs to handle workload and to hasten the process.
HNI’s Shifting to Large Banks
Despite the liquidity backstop promise extended by US Fed and US Treasury, depositors are moving funds into larger banks such as JPM, Citi and Bank of America. This phenomenon is more so for accounts holding >$250k (the limit up to which is guaranteed by FDIC).
The 25 biggest US banks gained $120B in deposits in the days following the collapse of SVB and Signature while smaller banks saw a net outflow of $108B during that period. This has been the largest weekly decline in deposits at small banks and poses the risk of inciting more financial instability.
Citi’s private bank servicing wealthy individuals is opening accounts within a day compared to usual timeline of one to two weeks. Citi is reported to open accounts & initiate fund transfers even as new clients are under compliance checks.
Larger banks are subject to significantly tougher regulatory scrutiny as a result they become attractive destinations for shell-shocked depositors.
Portfolio diversification is not new. Long shadow cast by the debacle of three sizeable banks within a space of a week has exposed the fragility in the system. This has prompted depositors to diversify not only their portfolios but also their banks.
Moreover, comparing the actual assets held by large banks to mid-sized banks:
SVB and Silvergate, both of which collapsed had their assets largely held in bonds held to maturity or available for sale. For SVB, the maturity date was in the far future, posing liquidity concerns when a bank run ensued.
By contrast, Silvergate largely had bonds available for sale but selling them all at once would have caused huge realized losses.
Another interesting takeaway is the way in which each regional mid-sized bank adopts a different portfolio tailored for their specific clientele and their needs. Although, this allows them to fine-tune their operations and holdings, it comes with the downside of financial instability during periods of aggressive rate hikes and economic uncertainty.
By contrast, Citigroup, JP Morgan, BoA, and PNC have portfolios that are well diversified with a healthy mix of cash & interbank loans, loans, bonds to maturity, and bonds available for sale. Crucially, their significant cash holdings allow them to weather the storm far better and eases any liquidity concerns for depositors.
Capital Flow Towards Asset Managers
Large asset managers are also witnessing an influx of funds. Seemingly the money is moving away from regional banks and into majors and asset managers offering access to money market funds. Money market funds which hold US Government Debt are considered the safest destination for large amounts of fund given the overwhelming uncertainty in the banking sector. They also have the added advantage of offering investors seniority in case of bankruptcy proceedings.
Certain MMF’s are currently offering yields as high as 5.02% compared to a paltry 0.23% average for bank deposits, making the shift towards MMF’s a no-brainer for many.
More than $300B has flown into money market funds in March taking the overall assets in money market funds to a record $5.1T. This also represents the largest month of inflows for asset managers since the start of the COVID-19 pandemic. Goldman, Fidelity, and JPM are the biggest beneficiaries from these inflows.
Goldman’s US money market funds have increased by $52B or 13% since the beginning of the banking crisis on March 9th. JPM’s funds received $46B while Fidelity saw $37B of inflows according to data from iMoneyNet.
Capital Flow into Gold
Gold is one of the most prominent safe haven assets that investors look to in times of economic uncertainty and instability. This capital flow was seen during the 2008 financial crisis when bank deposits plummeted and Gold price skyrocketed.
The same can now be seen on an even larger scale. Commercial bank deposits have plummeted well below even 2008 levels while the price of gold is teetering around $2,000/ounce, the highest price ever.
Although, some gold investors choose to buy physical gold or jewellery, larger investors often opt for other instruments that are more cost effective such as ETF’s or Futures. This too offers the larger banks a huge opportunity to benefit from the inflow of capital into gold-linked products through their investment banking divisions.
GLD, or SPDR gold trust is the largest Gold ETF. It saw a net inflow of $915M in March. The same can be seen in CME’s GC futures which saw managed money traders increase their net long positions by 5x or 83k contracts ~$16B.
Trade Setup
This case study illustrates potential gains to be harvested from spread trades as funds move from regional banks to majors. With rates remaining elevated the majors enjoy a comfortable Net Interest Margin. Rising deposit base by cherry picking high credit quality customers will enable banking majors to vastly outperform the regional banks.
Therefore, this case study sets for three spread trades -
(a) Long JPM and Short KBWR (1:3)
(b) Long COF and Short KBWR (1:2)
(c) Long C and Short KBWR (1:1)
A spread trade requires that the notional values of each leg of the trade to be identical. Accordingly, the ratios above have been provided based on the closing prices as of April 3rd. Table below sets out entry, target, stop and reward-to-risk ratio for each of these trades.
Long JP Morgan & Short KBWR
● Entry: 2.82
● Target: 3.17
● Stop: 2.62
● Profit at Target: $16
● Loss at Stop: $9.5
● Reward-to-Risk Ratio: 1.7x
Long Capital One Financial & Short KBWR
● Entry: 2.08
● Target: 2.54
● Stop: 1.9
● Profit at Target: $21
● Loss at Stop: $8.5
● Reward-to-Risk Ratio: 2.5x
Long Citibank & Short KBWR
● Entry: 1.01
● Target: 1.19
● Stop: 0.937
● Profit at Target: $8
● Loss at Stop: $3.5
● Reward-to-Risk Ratio: 2.2x
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com cme /.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Technical Analysis In The Following 3 StepsThe problem is finding the right stock to buy
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Look for a "Super Gap" On Friday
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JPM JPMorgan Chase Call OptionsIf you haven`t sold JPM here:
or here:
then you should know that JPM JPMorgan Chase seems to be most capitalized bank in the US, ready for the economic hurricane that its CEO, Jamie Dimon, predicted.
Most business and retail clients will move their funds to JPM after this bank run.
Looking at the JPM JPMorgan Chase options chain, I would buy the $140 strike price Calls with
2023-7-21 expiration date for about
$3.95 premium.
If the options turn out to be profitable Before the earnings release, i would sell at least 50%.
Looking forward to read your opinion about it.
JPM: No CrisisRecord first-quarter revenue on Friday that topped analysts’ expectations as net interest income surged almost 50% from a year ago on higher rates.
Here’s what the company reported:
Adjusted earnings: $4.32 per share vs. $3.41 per share Refinitiv estimate
Revenue: $39.34 billion, vs. $36.19 billion
The bank said profit jumped 52% to $12.62 billion, or $4.10 per share, in the first three months of the year. That figure includes HKEX:868 million in losses on securities; excluding those losses lifts earnings by 22 cents per share, resulting in adjusted profit of $4.32 per share.
Companywide revenue rose 25% to $39.34 billion, driven by a 49% rise in net interest income to $20.8 billion, thanks to the Federal Reserve’s most aggressive rate-hiking campaign in decades. That topped analysts’ expectations for interest income by more than a billion dollars.
The bank also boosted a key piece of guidance that bodes well for the near future: Net interest income will be about HKEX:81 billion this year, about HKEX:7 billion more than their previous forecast of $74 billion, CFO Jeremy Barnum said Friday.
The change was mostly driven by expectations that JPMorgan will have to pay less to depositors later this year if the Fed cuts rates, he said.
Shares of the bank rose 7.5%. That is its biggest upside move on an earnings report in more than 20 years, according to Bespoke Investment Group.
“The U.S. economy continues to be on generally healthy footings — consumers are still spending and have strong balance sheets, and businesses are in good shape,” CEO Jamie Dimon said in a release.
“However, the storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks,” he said, adding that the industry could rein in lending as banks become more conservative ahead of a possible downturn.
Money in, money out
JPMorgan, the biggest U.S. bank by assets, is watched closely for clues on how the industry fared after the collapse of two regional lenders last month. Analysts had expected JPMorgan to benefit from an influx of deposits after Silicon Valley Bank and Signature Bank experienced fatal bank runs.
Indeed, JPMorgan saw “significant new account opening activity” and deposit inflows in its commercial bank, Barnum said.
The money flows implied “an intra-quarter reversal of the recent outflow trend as a consequence of the March events,” Barnum said. “We estimate that we have retained approximately HKEX:50 billion of these deposit inflows at quarter-end.”
JPM / JP Morgan - Don't Gamble On Regional BanksI know that whenever something drops by 30 or 50 or 70 percent in one or two days it seems like you might be able to smash buy and ride the bounce back to the top, but just take a look at how well that worked out for tech stocks once the market started to correct at the end of 2021, or just take a look at how well that worked for Silicon Valley Bank dip buyers who found their shares worth $0 in a few hours.
JP Morgan and the other big American banks aren't just "big American banks," but the financial arm of the United States' military industrial complex. Moreover, they're something that's become a pillar of the entire world's financial ecosystem. The heart of the world's economy is in Manhattan, but they're also the ones responsible for providing a financial life line (a blood transfusion) to the Chinese Communist Party all of these years.
Here's some things everyone should think about:
1. Regional banks are not a buy, because they need to be eliminated for Central Bank Digital Currencies
2. SWIFT itself is expanding its CBDC platform pilot globally after a test run that involved a JP Morgan-created centralized fork of Ethereum .
3. CBDCs are required for the global implementation of the CCP's social credit credit system
4. CBDCs mean citizen and small business banking becomes centralized in Federal Reserve proxy accounts ran through the biggest banks
5. Welcome to communism. The purpose of all of this is to install communism for the purposes of attempting to change the human living condition.
Credit Suisse is probably going to implode for real and that's going to cause some chaos for the markets. This play is pretty much a mirror of the 2008 GFC with Bear Sterns, which everyone would do well to educate themselves on how that went down .
The problem with Central Bank QE isn't all the Libertarian crap you've been told. The problem is that deposits are a liability for banks because they have to pay interest on them, and so they need to seek yield. Seeking yield on a very large position is very hard, because guys like JPM and Blackrock and Vanguard happen to make the markets, and markets are a euphemism for a casino, and casinos are zero sum games where there's a small number of winners and a large number of losers.
And so when there's no interest rates, banks have to take risks to generate cashflow to pay interest to the very, very large depositors. When QE was hot that seemed to have meant long bonds, long equities. And then the Fed raised rates 5 percent while they were holding a lot of equities and bonds and now those bonds and equities aren't worth very much.
So they're red on their positions and can't HODL through it because of bank runs and go under.
It's as simple as that and it was an engineered play for smaller banks to be destroyed and then the big banks buy the liquidations.
It's the same as how whales kill sharks by holding them upside down in the water, which makes them disoriented and paralyzed, and then the whales eat their livers and leave them to die.
JPM on the monthly is not likely to have topped and gives you no reason to think there's a financial crash or any real bearishness brewing:
Yet the weekly shows you confluence between Fib levels and gaps, and that it's just too early to go long, and kind of scary to scalp short to boot:
JPM's double tops at $145 made very little sense at the time, and that's because, in my opinion, they were short their own stock under $150 in anticipation of what everyone who's running big data analysis for real knew, that SIVB and SBNY and SI would collapse, that CS was a bloated corpse in the river that the Swiss National Bank couldn't save, and that it was time to start taking down the regional banks by using the crisis as an opportunity.
Naturally, being a bank and part of the sector, this will give grounds to make JPM's shares drop, so they just sell, and then buy back, and then give themselves bonuses and go for happy hour with cocaine and strippers when the drama is over because someone buys CS and the Fed pauses hikes, and they pump their own stock back to $200.
Another thing is that the narrative is that equities are *going2themoon* because the Federal Reserve just HAS to stop hiking rates now. Look at how much damage the rate hikes caused! They just have to stop hiking now!
They probably won't. FOMC hasn't led to a dumpster fire in quite a few months and you should be concerned about that.
After Wednesday's FOMC, the next one afterwards is May 2. Expect them to pivot then, not now, and for May, June, July to become another "most hated rally" for bears.
Except this time it won't be a bear market rally, but a bump and run reversal, that pumps tech and other dumpster trash to a new ATH that makes bears blow their accounts.
Look for longs in the $110 range on JPM and expect the October bottom to hold, because it's called a pivot for a reason, sons.
It's JP Morgan. This kind of disaster in the markets today was arranged by them, and is not something they're personally subject to.
The disasters that lie ahead for the current regime because of what they've been doing to help the CCP as it persecutes Falun Gong over the last 24 years are retribution that they haven't arranged and that nobody can dodge, and something that will catch the entire market off guard.
But for now, you can get $40 a share if you buy in the $110s and sell at $150. And the time horizon is probably literally no later than the end of May, too.
Don't go long on regional banks. Go long on the big banks. And then get out and be careful, because everything in this world is about to change very quickly, and human beings are not going to be able to bear the terribleness of what happens when the regime goes to install communism worldwide.
JPM 1H volumed spring of 1/2 correctionDaily chart signal
Trend trade 2IBK
+ long balance
+ support level
+ volumed ICE
+ volumed 2Sp + test
+ 1/2 correction
+ bullish bar closed entry
Hourly chart formation
Trend trade 2IBK
+ long balance
+ support level
- low volume expanding ICE level
+ 1/2 correction
+ volumed Sp + weakness test
+ after bullish bar close same level entry
Calculated affordable stop
1 to 2 target
JPM JPMorgan Chase & Co. Options Ahead Of EarningsIf you haven`t sold JPM here:
Then looking at the JPM JPMorgan Chase & Co. options chain ahead of earnings , I would buy the FWB:124 strike price Puts with
2023-4-14 expiration date for about
$1.35 premium.
If the options turn out to be profitable Before the earnings release, i would sell at least 50%.
Looking forward to read your opinion about it.
JP Morgan HnS Dragon with Bearish ConvergenceJPM after Bearishly Engulfing on the Monthly has formed a bit of a Head and Shoulders pattern while at the sametime forming a Bearish Dragon with some MACD Bearish Convergence as the RSI enters the Bearish Control Zone if price continues to do what it's doing i could see JPM making a full 0.886 Retrace.
JP Morgan locally correcting. JPMBounce off a local resistance, which I did not show, sinking in the phase of a possible B Wave. Very short term out look of a ~5% drop in stock price or more. ATR (moving) for Stop.
We are not in the business of getting every prediction right, no one ever does and that is not the aim of the game. The Fibonacci targets are highlighted in purple with invalidation in red. Confirmation level, where relevant, is a pink dotted, finite line. Fibonacci goals, it is prudent to suggest, are nothing more than mere fractally evident and therefore statistically likely levels that the market will go to. Having said that, the market will always do what it wants and always has a mind of its own. Therefore, none of this is financial advice, so do your own research and rely only on your own analysis. Trading is a true one man sport. Good luck out there and stay safe.
Banking Sector: Part 2: JPMLast week we looked at the banks through the lens of relative strength ratios and the yield curve, concluded that all banks were weak, that regional banks are much weaker than the money center banks, and that banks at the index level had underperformed the SPX since the early 2000s. Prior to the events of the last few weeks, I believed that a significant credit contraction was already unfolding. Recent events have solidified that view. In my view we are early in a banking crisis, that will be centered in regional banking. I expect significant distress but have mixed feelings as to how this Fed will react.
The four largest US banks have 9.1 trillion in assets representing roughly 40% of all banking assets. All four are considered systemically important banks and can be considered the sector generals. This week we focus on JP Morgan.
JPM Monthly:
Much stronger volume in comparison to the recent past after breaking down from strong resistance suggests that the corrective behavior from the October 2022 (101) low to the most recent high is complete. The low volume on the rally coupled with the expansion of volume and a show of weakness suggests that a significant decline is likely unfolding. MACD oscillator failed to generate a buy signal and has turned lower again (see the notes in the triple screen paragraph).
Uptrend support at 104 is minor, I will be surprised if it is strong enough to contain the high volume thrust that is unfolding.
Lateral support at 101 and again at 77 are prime areas to monitor for bullish behaviors.
The 50% retracement of the entire bull market falls in the 88.00 area.
The potential for a head and shoulder top is very apparent in this perspective.
JPM Weekly:
Weekly: Making a high-volume show of weakness after testing the internal 141 resistance zone. The high volume coupled with recent closes near the lows of the weekly price spreads strongly suggests follow through.
The weekly MACD oscillator has rejoined the monthly oscillator (see triple screen below) on a sell signal.
First meaningful chart support cluster in the 101 zone (roughly 17% lower). The support confluence begins at roughly 106 and ends at roughly 95.00 with the lateral support from last Septembers lows (101) being by far the most consequential.
A significant violation of the 101 zone would strongly suggest that a systemic event was unfolding. A breakout would likely target the next major lateral support in the 77 zone.
Triple Screen:
JPM Triple Screen: Poor MACD momentum across all time perspectives. All perspectives are on sell signals. Note the fresh turn lower in the weekly. The monthly is interesting in that the faster average moved back (hooked higher) to test the slower average and then failed. I generally consider this a failed test (in momentum terms). The failed test makes the weekly sell signal more compelling. Note that the daily is a bit oversold, but with monthly and weekly turning over it isn't a major warning.
Fibonacci:
There are three relationships that interest me.
The first is the retracement of the entire bull market. The first leg lower found support in the 38% retracement zone. The 50% comes in around 87.00 and finally the 61.8% in the 67.85 zone.
The second is the retracement of the last bull thrust from 77.00 - 173.00.
The third is the Fibonacci extension of the 2021 high, to the most recent support and then extended from the last high. Equality (1) @ 107.00, 43.00 and 26.00.
Conclusion: Price action is extremely poor. Next zone to monitor for bullish behavior is around 101, but I suspect that much lower is likely. The caveat clearly is the Federal Reserve. If they decide conditions are dire and pivot to cutting rates and ending QT, this could change rapidly. Monitor credit spreads for distress. In the meantime, I will favor strategies that allow me to sell into hourly and daily perspective strength.
And finally, many of the topics and techniques discussed in this post are part of the CMT Associations Chartered Market Technician’s curriculum.
Good Trading:
Stewart Taylor, CMT
Chartered Market Technician
Taylor Financial Communications
Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
Will tomorrow be the day $JPM drops to $71? I think it could >It sounds a little nuts, I know. But hear me out. We clearly have a double touch on the upper channel line on the 12 month- clear rejection. The 9 MA on the yearly looks awful too. General weakness, there and within the stoch rsi and mac d. The 3 month also looks awful. Let's hone in though on the 9 MA and 20 MA on the chart though- they're clearly about to fall through them. Oh, not to mention, the major obvious head & shoulders pattern. Everything looks horrible. Almost makes me wonder if the speech wasn't "awful" news today because tomorrow is the real drop, when everyone thinks the worst is out of the way... who knows? I just call the technical analysis like I see it. And based on the daily time frame anyway, I don't see anywhere else that JPM could LOGICALLY retrace to... so why would it? Time to drop :)