JPMorgan Chase: An Earnings Preview

Bank Earnings Effect

Each earnings season begins with the banks reporting first. This quarter, bank earnings are kicking off tomorrow, with the following companies reporting:

  • JPMorgan Chase & Co (JPM)
  • Wells Fargo & Co (WFC)
  • Citigroup (C)
  • BlackRock, Inc (BLK)
  • PNC Financial Services Group (PNC)

Banks can set the tone for the season. This is especially true this quarter because of the bank crisis that occurred. While the focus on this has diminished, earnings have the potential to put this concern to bed completely or raise it again by highlighting it through potential financial consequences.

This impact often bleeds into anticipation for companies reporting in the weeks post-banks. It can have the impact of sending tech stocks higher (in the instance that bank earnings are taken favorably) or lower (if they put a cloud over the overall market).

By tomorrow morning, we’ll know which it is.

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JPM in Focus

I’d argue that JPMorgan is the most critical bank stock to report tomorrow. This stock is typically my favorite bank trading vehicle, and it’s generally the strongest of the bank stocks.

Right now, it’s setting up to make a big move. This is because it has a weekly squeeze and sits on a critical area of support. As you can see from the highlighted sections, the last three weekly squeezes led to significant moves. Technically speaking, the current weekly squeeze is set to break out to the long side, which would make it a bullish squeeze. This is because it’s pulled back and is holding at the 50 SMA, volume is oversold, and it has a short-term bullish trend from the October lows.  But, as we know, squeezes can fire in the opposite direction based on the technical setup, especially if there is a major news-related catalyst.

Check out the technical signals in the weekly chart below:

JPM Weekly Chart – Swing Grid

My swing grid uses my TrendStrength Turbo candles to determine the direction and strength of the trend, the SqueezePro to look for consolidation breakouts, and the TurboVZO to measure volume flow.

As you can see, the last few weekly squeezes have led to big moves! Now, will this weekly squeeze fire on earnings? It could, but weekly squeezes can also squeeze for months on end before they fire. Let’s check out my earnings data to learn more.

JPM in the Earnings Hot Zone

JPM in the Hot Zone over the last two years. These earnings stats demonstrate the pre and post-earnings moves within that timeframe. You can also see the volatility trend and the overnight gaps and squeezes over time.

I am noticing an immediate pattern by analyzing earnings data on JPM over the last eight quarters. While JPM has beat earnings estimates 6/8 quarters, the stock price has gapped lower post-earnings 7/8 quarters. Two quarters ago, in October of 2022, there was an outlying move post-earnings, in which the stock price gapped up by 2.4% and experienced a major breakaway gap and continuation move. While impressive, this was also an outlying event and pretty abnormal, especially seeing how it’s typical for JPM to fall between -0.8%-4.4% post-earnings.

This tells me that even though JPM consistently beats estimates, shareholders aren’t regularly impressed. Therefore traders can look for a bit of softness post-earnings in most cases, regardless of whether JPM beats estimates or not. With the recent outlying significant move to the upside post-earnings, if we do happen to get a higher gap, traders can look for a surprise momentum move that could potentially cause the squeeze to fire.

In either case, JPM and its reaction can put a cloud over earnings sentiment, or it can bring about sunny skies. A bullish move will be bullish for the market, while a bearish move will be cloudy yet typical.

I look forward to seeing which way it shakes out tomorrow!






P.S. Are you interested in checking out more earnings stats? Click on the link to learn about my Hot Zone below!




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