This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Crunching the Numbers on Bank Earnings Season: JP Morgan, Wells Fargo, Citi

NEW YORK (TheStreet) -- Regional and money center banks have traded lower since the Federal Reserve reported the results of the first round of stress tests on March 21. Today I update the tables we showed in "Mega-Chart! Regional Bank Earnings Season" on April 3.

Kicking off bank earnings season are JPMorgan Chase (JPM - Get Report) and Wells Fargo (WFC - Get Report), which report before the opening bell on Friday.

Today's "Crunching the Numbers" tables provide updated moving averages, key levels and earnings expectations for the 24 bank stocks in the KBW Banking Index (I:BKX). See page 2 of this article for the charts.

The first table provides the five major moving averages and stochastic readings. Note that 20 of 24 of these banks are lower since March 21, led by "too big to fail" Bank of America (BAC) and Citigroup (C), which are down 5.4% and 5.8% respectively since those first stress test results. Capital One (COF) has the biggest gain but is only up 1.2%.

Note that 18 of 24 are now below their 21-day simple moving averages, which are warnings from the daily charts. Eight are below their five-week modified moving averages, which are warnings on the weekly charts.

The second table provides earnings estimates and dates, value levels at which to buy on weakness and risky levels at which to sell on strength. Since our April 3 post, analysts lowered their earnings per share estimates on seven of the 24 bank stocks, including Bank of America, Citigroup, JP Morgan and Wells Fargo, our focus names in today's report. None of the 24 had upward revisions to earnings.

This week the U.S. banking regulators decided to raise the capital leverage ratio to 5% to 6% of total assets. This will require the eight largest banks to hold another $68 billion in capital beginning in January 2018. This is in addition to a still-unknown amount that will be required to fund the Deposit Insurance Fund by September 2020.

Keep in mind that recent quarterly earnings have been buoyed by reduced reserves for losses and asset writedowns. Mortgage activities have been slashed and profitability in securities held for trading may be underwater. New mortgage issuance is at a 14-year low and first time buyers have a difficult time qualifying for loans.

One of the biggest surprises to me is that Commerce Bancshares (CBSH), Cullen Frost (CFR), US Bancorp (USB) and Wells Fargo have traded to new all-time highs when the banking index is just above its 50% Fibonacci retracement and well below its 61.8% retracement.


Bank of America ($16.62, down 5.4% since March 21) traded as high as $18.03 on March 21, then traded as low as $16.19 on April 7. It is below its 21-day and 50-day simple moving averages at $17.11 and $16.86.

The weekly chart shifts to negative with a close on Friday below its five-week modified moving average at $16.79. A semiannual value level lags at $10.69 with a quarterly pivot at $16.53 and monthly and weekly risky levels at $16.72 and $16.88.

Citigroup ($47.16, down 5.8% since March 21) has been below its 200-day SMA at $50.17 since March 26. It traded to a 2014 intraday low at $46.12 on April 8.

The weekly chart is negative, with its five-week MMA at $48.26, and with a monthly value level at $46.06. An annual value level is $21.86, with a weekly pivot at $47.21 and semiannual and quarterly risky levels at $48.06 and $49.61.

JP Morgan ($59.27, down 1.5% since March 21) set a multiyear intraday high at $61.48 on March 25, then traded as low as $58.25 on April 8 and is just below its 21-day SMA at $59.41.

The weekly chart is positive, with its five-week MMA at $58.75. Monthly and quarterly value levels are $56.06 and $54.47 with a weekly risky level at $60.85.

Wells Fargo ($49.49.10, flat since March 21) set an all-time intraday high at $50.49 on April 4, then dipped to $48.44 on April 8. The stock is above all five key moving averages shown in today's tables.

The weekly chart is positive but overbought, with its five-week MMA at $48.07. Quarterly and monthly value levels are $47.33 and $46.67, with a weekly risky level at $50.41.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
JPM $65.40 -1.20%
WFC $55.75 -0.82%
AAPL $130.03 -1.30%
FB $79.17 -1.20%
GOOG $532.91 -1.30%

Markets

DOW 17,983.75 -142.37 -0.79%
S&P 500 2,112.66 -8.13 -0.38%
NASDAQ 5,077.6670 -20.3090 -0.40%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs