The Big 3: JPM, GOOGL, AMD

Marlee Caden (0:02)

Welcome back to Trading 360, I'm Marlee Caden. It's time for the Big Three. We've got three stocks for you, three charts. Ben Watson will be taking us through those charts. Here to take us through his stocks, Joe Tigay, CTO at Equity Armor Investments. Great to have you both with us. Joe would love to get your thoughts when we're seeing the markets just move down overall as we got our internist kickoff with the big banks. Bit of a mixed picture, some interesting reactions here. One we'll dive into in your Big Three, but what are your overall thoughts before we get to them?

Joe Tigay (0:32)

Big picture, we maybe a little bit in limbo in the market here in October, maybe waiting for the next big catalyst, maybe waiting to be post the election, maybe seeing the next move that's going to happen geopolitically in Iran. So in limbo, maybe some consolidation, not the worst consolidation in the world given that we're near all-time highs here in the stock market. Some sell-off and some of the key drivers of the market, chip names going a little bit lower lately, maybe just more consolidation, more profit-taking. There's some rumors and some whispers coming out there that the driver of these chip sales, maybe they're just a little bit too much too fast. Maybe some of the big purchasers that aren't public yet, that are private companies that we don't have a great read-through on their profitability. Maybe they're not going to make as many purchases as we previously thought. It's something that's been out there for a while. You sometimes get these stories from China. They have new technology that's going to upend the space. This has been out there for a while. For the past three years, we've seen narratives like this and we've seen pullbacks in the markets push through it with outstanding earnings and outstanding reports coming forward. That's what we're watching going forward. We just want to see more of the spending going forward, more of the hyperscalers saying, hey, we believe in this technology, we believe in the future, and we know the way to get there is through more computing.

That's really what the market's been looking for. If we get that, I think the rally will continue once we get these earnings going in full force.

Marlee Caden (2:03)

Let's talk about the first pick in your big three. It's a name that we've been talking about all morning. I'll continue to talk about it all day. It's JPMorgan Chase.

Interesting reaction, interesting, surprising results. They missed expectations here, but then they signaled that their net interest income rose, and we've seen a bit of a see-sawing. Now up close to a percent and a half, if you can believe it. So how are you looking at JPMorgan Chase right now, Joe?

Joe Tigay (2:31)

Yeah. So for me, this is my preferred bank to own for the long term. For me, this is just a great read-through on how the economy is hanging in there broadly because there's a lot of pressure on the economy. We do have interest rates rising. We do have inflation stronger than we'd like it to see. We do have oil higher than we'd like it to be. So this is a lot of pressure on the economy. We see pressures on the economy. We usually see banks struggling.

But the flip side of that, of course, is there's a lot of economic activity going through, specifically through all the AI spending. So that's the push-pull here. We'd love to see the spending filtering through to the rest of the sectors out there in the market, obviously. But we want to see the banks, specifically big banks like JPMorgan having strong quarters to show, hey, the economy overall is strong in light of all the pressure.

Marlee Caden (3:25)

All right, Ben. So let's dive in to this chart here. There's been pressure on the banks, a lot of question marks when it comes to interest rates. If we saw a peak last quarter with all the IPO activity, not a lot of movement year to day. We're only up a little more than 4%.

So when you look at the technicals here for JPMorgan Chase, what stands out to you?

Ben Watson (3:45)

Sure, Marlee. And this is one that you and I have talked about just in the last week here. And looking at this little bit of a pullback in the intermediate term back down to a support level that's been fairly regularly tested right around that 326 mark. Now we see the bit of a move to the upside into the earnings announcement. And with this rare double miss top and bottom line, we get a gap up and a little bit of a sell off here. And in fact, a sell off to a spinning top. So that idea of kind of wait and see, I think is caught in the context of they missed on earnings, their guidance was good. So now there's more opportunity for this to just kind of sit here and maybe spin a little bit, to borrow a phrase. But momentum is increasing. It's sitting above that 335 support level and underneath that 343 resistance, the 50 period moving average rolling over a little bit here. The challenge might be from a technical perspective is if we take kind of the narrative out of here and if rates continue to have the impact that they've had on the financial sector, if this breaks back down towards that 326 level of support and then through it, this could potentially become a fairly large head and shoulders type of reversal pattern that could put prices back down in those mid 200s. Doesn't guarantee it by any means, but technical analysis might suggest that that's where price might go. And I think that maybe is the extreme case here, but it doesn't seem to be strongly bullish necessarily at the moment either, Marlee.