Can you believe it’s that time already? The bank stocks are gearing up to kick off earnings season, starting on Tuesday.
We’ll hear from JPMorgan Chase (JPM) - Get JPMorgan Chase & Co. (JPM) Report, often referred to as the bluest of blue-chip bank stocks. The other is Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. (GS) Report, a leader in wealth management and trading revenue.
For what it’s worth, PepsiCo (PEP) - Get PepsiCo, Inc. Report also is reporting earnings on Tuesday before the rest of the banks like Citigroup (C) - Get Citigroup Inc. Report and Wells Fargo (WFC) - Get Wells Fargo & Company Report report later in the week.
Analysts aren’t overly bullish on the group for the quarter, with consensus estimates calling for a year-over-year decline in revenue.
However, the stocks have been consolidating lately and recently received good news after passing the Fed’s stress tests. Let’s look at some charts.
Trading JPMorgan Chase
I wanted to zoom out a bit with JPMorgan by using the weekly chart. It does a good job showing how, despite a decent rally then a hard two-week pullback, the stock is roughly flat over the last four months.
Last week, JPMorgan put in a robust weekly bar despite the holiday-shortened trading week. Shares hammered off the lows and closed near the highs. We’re seeing some continuation higher on Monday.
Now reclaiming the 10-week and 21-week moving averages with Monday’s rally, bulls are looking for some more good news. Mainly, a post-earnings close above these two measures, followed by a close over $161.75. That starts to unlock further upside, such as the highs near $167.
If JPMorgan can clear its current high at $167.44, then perhaps it can make a further push up toward the 161.8% extension near $180.
On the downside, a move below last week’s low could put the 10-month moving average in play.
Trading Goldman Sachs
Goldman Sachs has been trading a bit better, although it’s also been volatile in recent weeks.
Shares have been wedging into a tighter and tighter range, marked by a series of higher lows and lower highs.
On Thursday, Goldman Sachs fell hard, but stopped just shy of the 21-week moving average. The stock followed that disheartening session with a gap-up open on Friday and a weekly close above the 21-day, 50-day and 10-week moving averages.
Shares are pushing higher again on Monday. From here, it’s simple.
Bulls want to see Goldman Sachs hold the 50-day moving average on any sort of post-earnings pullback. Below puts the gap-fill in play from Friday’s gap-up (near $363), followed by last week’s low and potentially the 21-week moving average.
On the upside, let’s see if Goldman Sachs stock can rally into the $390s. If so, $400-plus is in play.