The bulls are bouncing back following their second-worst beating of the year as the market is up 0.5% heading into the final hour of trading. The opening gains by the major indexes are simply a retest to resistance which just served as short-term support.
Much of the strength has come from the Financial stocks which are getting a pop despite a downgrade from Moody’s (MCO, $34.19, up $0.83) which lowered the credit ratings on 15 global banks. Of course, Moody’s has been warning of the news and Wall Street has been expecting it so the sector is actually rallying on the news as the “overhang” is lifted.
JPMorgan Chase (JPM, $36.21, up $0.70) is leading the Dow higher and has had a sweet little rally from the June 4 lows. We have to hand it to Jamie Dimon who looked like a Champ against the Keystone Cops that make up the House Financial Services Committee. The knuckleheads, led by Barney Frank, wanted to throw their weight around and looked like idiots when they got to arguing with each other earlier in the week.
One Senator did get it right so we have to give him props as he questioned why they were even there. Jim DeMint, a Republican from SC said “we can hardly sit in judgment of you losing $2 billion when we lose $2 billion every day”.
There were a few zombies who got brownie points with Mr. Dimon as they asked him about how to fix the financial system and the problems plaguing Europe.
We have always been a fan of JPMorgan and have told you they got squeezed when the market figured out their position and started betting against them. The $2 billion loss could turn out to be more and we will know more when they announce earnings in July but the next time Jamie speaks, buy call options for the day.
We thought there would be some headline risk with the stock but Jamie Dimon has proved he can hit it out of the park.
Shares of JPMorgan hit a low of $30.83 on June 4 and have rallied a sweet 20% since. If you bought options after seeing $30 hold, you probably would have done well with some July or September calls.
We were hoping shares would trip the $20’s because it would have been a “back the truck up” BUY for our Weekly Wrap but the market wouldn’t give us a discount.
We are still watching the stock and at some point down the road we will likely add JPMorgan to our covered call newsletter but not right now.
If the market is headed for a 10% drop then JP will follow and maybe we can get in at $30. Shares could push $40 on continued momentum but hopefully the market will give us another discount to pick up one of the best run investment banks on the planet.
As we head into the final hour of trading, the bulls are still pushing. The Dow is higher by 77 points to 12,650 while the S&P 500 is advancing 8 points to 1,334. The Nasdaq is up 28 points to 2,887.
We have some last minute updates for our current trades so we have to roll. We will be back Sunday night with our Weekly Wrap so until then have a great weekend everyone!