Mish’s Daily: Bank Earnings – JP Morgan Versus Goldman Sachs
Written by Michele ‘Mish’ Schneider
JP Morgan kicks off earnings season this Friday July 14th.
Goldman Sachs does not report until next week July 19th.
That is an auspicious day for us, as the July 6-month calendar range will be established.
We will be able to see how each bank and banks in general might trend for the second ½ of the year.
The word on the street calls for mixed earnings performances.
Investment banking revenue could be weaker.
The recent stress test turned out well.
Regional Banks still well underperforming the big banks. M&A between the 2 on the table.
J.P. Morgan’s stock looks very different from Goldman Sachs stock.
Besides revs from asset and wealth management, JP Morgan does lending-related operations, comprised of consumer lending, credit cards, and mortgages.
Goldman Sachs provides mainly asset and wealth management. That has not been a highly profitable area of banking in 2023.
JP Morgan has over three times the amount of assets as Goldman Sachs and generates over three times the net revenue.
What could happen to each stock technically?
The daily chart of JP Morgan (JPM) is in a bullish phase and has been for most of the year.
However, it has not been impervious to corrections. In late June we have one example where JPM tested the 50-DMA.
On July 3rd, JPM made a new 52-week high and then gapped lower.
Our Real Motion indicator shows a similar mean reversion around the same time. Plus, momentum is still sideways, but not as strong as price.
For the earnings, the stock must hold above 140. It also has to take out the reversal top high at 147.50 to keep heading north.
Goldman Sachs (GS) is in a bearish phase. What this chart does not show is the higher lows at every price drop since June 2022.
The low from June 28th followed by the gap higher the next day is the risk point going into earnings.
Zooming out, GS is not above the 23-month MA while JPM is.
Daily momentum on GS also had a mean reversion, the opposite of JPM’s as GS is a bottoming one, JPM is a topping one.
For earnings, should GS clear back over 330, then one can assume the investment banking side of their business is picking up. And that would make sense as many money managers are throwing in the bear towel and starting to buy.
In fact, if you are a contrarian, it could be that JPM’s credit card and lending side falters and the stock drops further into the end of the year.
Meanwhile, it could also be that GS sees a boost from the investment side and works its way higher. The best news-this happens right at the July 6-month calendar reset-a statistically reliable trading range edge. Follow the way the range breaks!
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Mish in the Media
Making Money with Charles Payne 07-10-23
Yahoo Finance 07-06-23
Benzinga Pre-Market Prep 06-30-23
July 12 Imran Lakha Trader Chats
July 12 Real Vision
July 13 TD Ameritrade
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