Skip to main content

Trading JPMorgan and Goldman Sachs: Bank Earnings Preview

JPMorgan, Goldman Sachs and other banks are set to kick off earnings season. Here's how the charts look going into the reports.

The bank stocks have been on fire lately, with JPMorgan Chase  (JPM) - Get JP Morgan Chase & Co. Report, Goldman Sachs  (GS) - Get Goldman Sachs Group Inc. (The) Report, Morgan Stanley  (MS) - Get Morgan Stanley Report and others leading the charge.

Investors have been piling into these names for a multitude of reasons. New deals - be it in M&A or new public offerings - have helped fuel top- and bottom-line growth for some firms.

For others, it’s the rebound in the economy that has investors bullish.

Just recently, the Federal Reserve also said it plans to lift restrictions on share buyback programs and dividend payouts from the banks. 

Finally, with earnings just around the corner, the optimism is spilling over into the stock prices.

Let’s look at a few charts as JPMorgan, Goldman Sachs and Wells Fargo  (WFC) - Get Wells Fargo & Company Report get set to report earnings on Wednesday.

Wells Fargo is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells WFC? Learn more now.

Trading JPMorgan

Daily chart of JPMorgan stock.

Daily chart of JPMorgan stock.

Known as a best-in-breed bank stock, this sector leader will be in the spotlight Wednesday.

JPMorgan continues to consolidate near the highs, as bulls await the quarterly results. Unfortunately, we often see a “sell the news” reaction in bank stocks and that’s possible here too.

Scroll to Continue

TheStreet Recommends

If that’s the case, I would love to see a dip to the $150 area, with the 10-week and 50-day moving averages coming into play as support.

A break of this area could put the $141 area in play. While painful in the short-term, a correction to this level gives bulls a retest of the 2020 pre-coronavirus high, fills the February gap and likely puts the 100-day and 21-week moving averages in play.

On a bullish reaction, look for shares to take out $157 resistance, followed by the high near $161.70.

That could ultimately pave the way for a longer term rally up to the 161.8% extension near $180.

Trading Goldman Sachs

Daily chart of Goldman Sachs.

Daily chart of Goldman Sachs.

Goldman Sachs has not had as much bullish energy as JPMorgan lately, with support coming in between $325 and $330.

Shares are hovering just above the 10-week and 50-day moving averages, an area that bulls will want to see hold as support after earnings.

If these measures fail, it puts the $307 to $309 area in play. The latter range of this zone was a key breakout spot in February. However, that breakout also left a small gap in play, near the lower end of that range, around $307.

On the upside, $335 has been resistance over the past few weeks. Clearing that level would be a big confidence boost for the bulls, putting $350 and the 52-week high of $356.85 in play.

Above that and $370 is on the table, which is the two-times range extension.