If the S&P 500 is the bellweather for the equity markets, JPMorgan Chase (JPM) is the bellweather for the bank sector. JPMorgan Chase reported earnings on Friday and blew the results out of the box. JPM earned $2.65 a share for the quarter versus expectations of $2.35 a share. And revenue of $29.9 billion came in $1.5 billion ahead of expectations.
The results were supported by record revenue and net income. Investors have been concerned that net interest margins would deteriorate since the US Feds said they would leave interest rates along, but net interest income grew by 8% year over year.
Consumer and business banking revenue climbed 15% to $6.6 billion and card, merchant services and auto revenue increased 9% to $5.8 billion. In addition, commercial banking revenue grew 8% to $2.3 billion.
The results were enough to send the stock up more than 4%, its best day in three years.
U.S. bank stocks have under performed the broader market in recent months on fears of an impending recession, with economists and investors citing concerns over a flattening yield curve and slowing housing market.
The reason the stock rose so much was because many people were short before the earnings were released. So the shorts had to cover, which meant they had to buy and then you had the buyers who wanted in because of the results. But can the good times roll, lets go to the charts to find out?
On the monthly chart price formed the infamous “M” pattern which is signalling a longer term reversal.
Which was also supported by the monthly trendline break.
Where price pulled back to a monthly supply zone.
Thus, the chart suggests to short price if price reaches the daily supply at $115.50.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.