The Arena
The S&P 500 notched a decent green day in what seems like an eternity but as expected the E-mini’s are already slipping back in after hours trading. As mentioned yesterday, in an effort to remain cautious, I think its safe to assume any rally will be sold off until further notice. Of relevance, during my analysis of JP Morgan Chase & Co. (JPM) I noticed a slightly peculiar trend starting to emerge. Companies are still making impressive amounts of money.
Now, what does that mean. Who knows! I know, not helpful, but it is interesting to see. Likely, the market is declining as forward looking estimates come down to more realistic figures. That said, It could also signal that the nasty recession we’re all expecting won’t be quite as bad as expected. I guess we will see…
The Coach
Like most all equities this year JP Morgan Chase & Co. has witnessed their share price decline to the tune of approximately 33% from their all time highs set back in October of 2021. With uncertainty in the United States and even more so around the world I think it reasonable to reach a hand in and test the shower water. Typically, I wouldn’t want to look a bear in the face with so much red already on JP street but with the aforementioned, I guess why not, right? On the other hand, JP Morgan Chase & Co. is currently trading at a major support level here so expecting it to fall lower may be akin to selling everything and buying bitcoin. Boy, that did not work out well, at least as of today… but then again, I’m sure those folks got out at the top. In any case, I’ll be considering a bearish call spread to see if the showers just right after a long day.
Will this financial powerhouse finally overcome the menacing grizzly? Patience young padawan, the answer you will find…
Here’s an interesting read from earlier this month by Investors.com: Is The Biggest Bank Stock By Market Cap A Buy As Inflation Swells? Additionally, for the optimist in us all, from CNBC: Even if oil hits $150 a barrel, JPMorgan’s Marko Kolanovic predicts stocks will reclaim 2022 highs.
The Attack
JP Morgan & Co. don’t seem to really know what the future holds based on the news articles I’m seeing. One day its doom and gloom, and from the article above, more pie in the sky to come. Ultimately, no one knows but I do think the prevailing sentiment in the market is bearish for now and because of this, I’m looking at a bearish call spread considerably out of the money. However, companies are actually still making bank (no pun intended) right now so getting bullish may be the way. What happens next?
Bullish assumption
| Buy To Open | Sell To Open | Entry Order | Total Risk | Prob. of 50% Profit |
| 15 JUL 22 105 Put | 15 JUL 22 106 Put | $16.00 | $84.00 | 84% |
Bearish assumption
| Buy To Open | Sell To Open | Entry Order | Total Risk | Prob. of 50% Profit |
| 15 JUL 22 124 Call | 15 JUL 22 123 Call | $19.00 | $81.00 | 87% |
God Bless,
Jeff
