JP Morgan News and Morning Market Technicals

By Andrew Nyquist
After JP Morgan’s (JPM) surprising announcement that they lost $2 Billion in their Investment Office on synthetic credit securities ($800 Million after tax loss), the market is on edge. The S&P 500 opened down 0.5%, while JPM is trading down over 9 percent. Other select bank stocks are taking note as well, as the morning slide still hangs over the sector.

After hearing the phrase “mark to market” many investors are concerned about what this means for the banking sector (Financials: XLF). Most are bracing for the accompanying PR nightmare that wouldn’t be pretty for the industry; these are the type of announcements that bring increased media scrutiny, stir social mood, and offer up reminders that the financial crisis isn’t that far behind us.

The news also came at a difficult time. Technically speaking, the S&P 500 had just reversed after touching the 1340 level and the mood was shifting to “hopeful.” On Twitter, many folks were looking for a continuation of the rally. But, as I mentioned on Twitter yesterday, I was uncertain of the technical vibe, so I decided not to put new money to work. Not only did the market lack follow through but it closed weak. And this is just trading lingo. From a macro perspective, the markets (S&P 500) remain in no man’s land hanging out under the all-important 1370 level.  And although this may create some short-term setups, I am inclined to remain patient, open to quick trades, but generally in a “wait and see” mode. If lower, all eyes will remain on 1340, then down as low at the .382 fibonacci retracement at 1290. If higher, watch the 50dma around 1385.

Today I am eyeing up good stocks, building a watch list, and remaining ready to pounce on opportunity… whether it be for a quick hitter or building a swing or longer term trade. Caution is still the word of the day as we head into the weekend with lots of loose ends out there, including Europe.

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Twitter:  @andrewnyquist and @seeitmarket     Facebook:  See It Market

No position in any of the securities mentioned at the time of publication.

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of his employer or any other person or entity.