JPM's mark to market losses announced about a week ago, as pointed out here and many other places are just the paper losses, winding down the position (who knows how far along they are) is where they could encounter double the losses as every fund out there knows where JPM's weakness is and will front run the asset classes forcing JPM to really pay up to unwind the position. so more losses were expected beyond what they announced.
As always, these things tend to snowball out of control as the many interconnections that few can comprehend or contemplate start effecting JPM. This morning JPM announced they are halting their share buyback program that they recently announced before the F_E_D's bank stress test.
Of course the announcement of the halt of the share buyback program came with caveats from Jamie Dimon such as, "This isn't related to their loss", "Loss is an isolated event", and "JPM's Fortress balance sheet remains".
Anyone with a month in the market knows this is certainly because of the loss and its a move JPM would absolutely try to avoid if at all possible as everyone realizes the repurchase program being halted is absolutely a sign that the JPM loss is probably much larger than initially announced, believe me, after front running the F_E_D's Bank Stress Test results and announcing a share buyback program, this is major egg on Dimon's face.
As for JPM trade (you may recall I covered the JPM longer term charts that seemed to show Wall Street knew about the JPM problems at least by April) this morning...
JPM on the open seeing large sell side volume, rallying back to resistance and failing with a -1.30% loss on the day while the Financial sector is at a +1.09% gain, which is also interesting with regard to the broader market as JPM is not sinking the financial sector with this news (who knows how many more banks have skeletons in their closet, but for now this is bullish action for the broad market and financials).
Whatever positive divergence JPM was building late Friday is now wiped out as it was negative on the open and negative at resistance this morning, sending JPM lower.
The 2 min trend also showed a late Friday positive divergence, I suspect as part of an overall Financial sector divergence (which was in place Friday afternoon), and the strong negative divergence in JPM this morning.
This relative positive 15 min divergence may have to be re-thought as it seems the JPM announcement wasn't discounted by the market (meaning they kept a lid on it until it was announced this morning-also meaning that the situation in JPM must be crumbling fast). I'd love to see JPM fill the $38-$40 gap to short this one, it doesn't look likely, but if financials broadly can lift JPM it's possible-LET THE TRADE COME TO YOU.
As a reminder, this was what out analysis of JPM's 15 min chart looked like after they initially announced the losses, it looks like some on Wall Street knew as far back as late March/early April.
This is the daily chart backed up before the JPM recent losses, also showing a substantial daily leading negative divergence, also suggesting elements of Wall St. were trading on this information before it became public -Surprise, surprise!
This is the current JPM daily chart, still leading negative. What strikes me is the size of the accumulation period would suggest JPM would have rallied higher, obviously the announcement and more importantly the knowledge of the trouble before the announcement cut this cycle short.
I'd set some price alerts for JPM around $38-$40 just in case, it would potentially/most probably be a nice set up to short in to strength
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