Financial Dividend Suspensions
After futures hit ‘limit down’ overnight and were -2% in the premarket, the Federal Reserve pledged asset purchases with no limit to support markets, sending futures up about 3% in a matter of minutes, only to be met with a 2% decline at the opening bell. Volatility continues, and as an active trader, I thrive on volatility.
At 6:59am ET this morning, Andrew Bary of Dow Jones Newswire published an announcement stating two mega-cap financial companies, JP Morgan Chase (NYSE: $JPM) and Goldman Sachs (NYSE: $GS) are suspending dividends and their share buybacks for the rest of the first quarter and the second quarter of 2020.
Buy and hold investors such as Warren Buffett of Berkshire Hathaway use buy and hold investing as a dividend collection vehicle. That said, if financial legends who specialize in dividend investing are invested in stocks which suspend dividends, dividend investors aren’t getting what they invested into; dividend payments.
This may cause wealthy dividend investors to simply sell their shares of stock - additionally, financial analysis companies such as Barrons may catch on, and issue a potential downgrade of the stock itself in the days and weeks to come after analyzing each respective scenario.
To start, let’s take a technical look at JP Morgan Chase, which suspended its 4.31% dividend yield. Indicated on the chart below, you’ll notice that JP Morgan Chase is currently trading just above its two-year low support of $76.91 after closing at $83.50 resistance this past Friday. Financial fundamentals paired with a bear trending market makes me bearish on this stock today as a trader.
Below current resistance of Friday’s $83.50 close and I’ll remain bearish on JP Morgan Chase into today’s trading session as below $76.91 support, we could see a new two year low on the stock itself, which could provide for a profitable short biased trade pairing financial sentiment with technical analysis.
Next, let’s cover Goldman Sachs. After suspending its 3.61% dividend yield, Goldman Sachs is currently trading just above its three year low of $130.85 support yet just below its current resistance of Friday’s close of $138.41.
Below $138.41 resistance and I’ll remain bearish on Goldman Sachs for a potential short biased trading opportunity to start the week. Should markets and financial stocks continue downtrending, below $130.85 support and Goldman Sachs could see a new three year low in the days to come.
Into a new trading week, TrackStar's proprietary financial professional tracking data has helped me identify two financial stocks which I’m short biased in, despite a market which may have many traders confused.
Should legendary dividend investors and financial institutions become bearish on JP Morgan Chase and Goldman Sachs in the days - or even hours ahead, I’ll remain bearish as well and seek to capitalize on a potential short biased trading opportunity.
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Disclaimer: This is not investment advice. This article is for information purposes only and opinion-based on financial advisor data across a selection of websites. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions.