Time to Trade the Banks?

Bank stocks opened the earnings season with a bang this past week – and not the good kind, as shares of the nation’s six largest banks fell after they released first-quarter results. But there may be more hope for the beaten-down sector than was implied by those drops.

Even amidst the coronavirus crisis, there had certainly been hope heading into earnings. After tumbling 28.6% in March, the overall Bank Index gained 25% during the week ending April 10, its best week since May of 2009.

Then came earnings. The nation’s largest banks reported their results, and one by one their shares tumbled, including shares of JP Morgan Chase (NYSE: JPM), the largest bank by market cap on Wall Street.

In a statement issued over the weekend, financial analyst Carleton English of Barrons contended that due to banks such as JP Morgan Chase demonstrating their ability to bounce back after being beaten down, he is currently bullish on banks, and might even be a buyer of stocks such as JP Morgan Chase.

While I don’t research buy-and-hold opportunities on a daily basis, I am an active trader who studies both financial catalysts and technical analysis on a daily basis. And I’ve got a textbook trading plan in place for JP Morgan Chase to start the week… in a green or red market.

Similar to many oversold stocks available to trade, JP Morgan Chase is currently trading right at a critical technical level – its 20-day simple moving average line, shown in green in the chart above.

While this may simply be a technical indicator to many, it’s my bull or bear indicator heading into a brand new trading week.

Should JP Morgan Chase trade above its 20-day simple moving average line, I’ll anticipate placing a bullish trade on JP Morgan Chase – planning to collect all available profits by market close.

On the other hand, if the stock trades below its 20-day simple moving average line, there’s an opportunity to make money in red markets! I’ll simply place a bearish (or short biased) position, and plan on paying myself intraday.

Yours for TrackStar trading,

Davis Martin
America’s #1 Premarket and Day Trader

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.

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